Opinion
EP-18-CV-179-KC
2019-09-04
John TRIEN, Plaintiff, v. FEDERAL HOME LOAN MORTGAGE CORPORATION and Nationstar Mortgage LLC, Defendants.
Mark Taylor Davis, Law Office of Mark T. Davis, El Paso, TX, for Plaintiff. Matthew D. Durham, McGuireWoods LLP, Christopher S. Ferguson, Jack O'Boyle and Associates, Dallas, TX, for Defendants.
Mark Taylor Davis, Law Office of Mark T. Davis, El Paso, TX, for Plaintiff.
Matthew D. Durham, McGuireWoods LLP, Christopher S. Ferguson, Jack O'Boyle and Associates, Dallas, TX, for Defendants.
ORDER
KATHLEEN CARDONE, UNITED STATES DISTRICT JUDGE
On this day, the Court considered Defendants Federal Home Loan Mortgage Corporation ("FHLMC") and Nationstar Mortgage LLC's ("Nationstar") (collectively, "Defendants") Motion for Summary Judgment, ECF No. 49. For the reasons set forth herein, the Motion is GRANTED .
I. BACKGROUND
This case involves an alleged wrongful foreclosure. On July 25, 2003, Sylvia Guerrero obtained a loan to purchase a home located at 3907 Mountain Avenue, El Paso, Texas 79930 ("the Property"). Defs.' Proposed Undisputed Facts ("PUF") ¶ 1, ECF No. 49-1. She promised to repay the debt by way of a note ("the Note"), secured by a deed of trust encumbering the Property ("the Deed of Trust"). Id. ¶ 2. Through a series of assignments, Defendant Nationstar obtained all rights under the Deed of Trust. Id. ¶ 3.
Unless otherwise noted, the facts are undisputed. See Resp. 10-11, ECF No. 51.
On December 20, 2004, Ms. Guerrero executed "an Assumption Wrap Around Warranty deed" conveying the Property to Plaintiff, who thereafter "made all payments on the mortgage ...." Resp. 12, ECF No. 51; Resp. Ex. F, ECF No. 51-1. The parties disagree as to whether Plaintiff is now properly considered a party to the Note and Deed of Trust. Defs.' PUF ¶ 3; Resp. 10. However, it is undisputed that no "Lender" in the chain of title ever consented to Plaintiff's substitution for Ms. Guerrero as "Borrower" on the Note or Deed of Trust. Resp. 10; Reply 6, ECF No. 52. Only Ms. Guerrero's name appears on these documents as "Borrower." Mot. Exs. A-1, A-2, ECF No. 49-2.
Eventually, Plaintiff failed to make payments and defaulted on the loan. Defs.' PUF ¶ 5. On June 13, 2017, notices of default, a thirty-day right to cure, and intent to accelerate were addressed to Ms. Guerrero and sent via certified mail to both the Property and 9565 Dyer Street, El Paso, Texas 79924. Id. ¶¶ 6–8; Mot. Ex. A-6. The amount demanded remained unpaid on July 13, 2017. Defs.' PUF ¶ 9. Nationstar mailed notices of acceleration on October 2 and notices of foreclosure sale on October 17, 2017 to the same addresses. Id. ¶¶ 10–11; Mot. Exs. A-7, A-8. Plaintiff states that he tendered certified checks to Nationstar (d/b/a Mr. Cooper) on November 2, 2017, in the amount of $6,918.65. Resp. 12; Resp. Ex. A. According to Plaintiff, this was an amount sufficient "for reinstatement of the mortgage." Resp. 12. Nationstar continued with non-judicial foreclosure proceedings after Plaintiff's payment. Defs.' PUF ¶ 12.
Defendant FHLMC purchased the Property at a foreclosure sale on November 7, 2017. Id. Shortly thereafter, FHLMC sent a written Notice to Vacate and Demand for Possession of the Property. Id. ¶ 14. When the occupants of the Property had not vacated it by January 31, 2018, FHLMC filed a forcible detainer suit in Justice of the Peace Court in El Paso County, Texas. Id. ¶ 15. The Justice of the Peace Court awarded FHLMC possession of the Property, and Plaintiff appealed this order to the County Court at Law in El Paso. Id. ¶¶ 16–17. The County Court ultimately awarded FHLMC a "judgment of possession [of the Property] against ... all occupants of said property." Id. ¶ 19. While FHLMC's state-court action was on-going, Plaintiff initiated a separate action in the County Court at Law on February 28, 2018. Notice of Removal Ex. 4, ECF No. 1. Plaintiff sought declaratory, injunctive, and other relief to set aside the foreclosure sale and prevent eviction. Id.
It is unclear from the parties' filings whether Plaintiff, Ms. Guerrero, or some other person(s) now occupy the Property.
On May 22, 2018, after an ex parte hearing conducted without notice to Defendants, the state court issued a Temporary Restraining Order ("TRO") enjoining FHLMC from "directly or indirectly selling or attempting to sell or gain possession" of the Property. Id. Ex. 7. On May 29, 2018, the state court extended its TRO and set a hearing on Plaintiff's Motion for a Temporary Injunction for June 12, 2018. Id. Ex. 9. On the day of the hearing, FHLMC removed Plaintiff's state-court action to this Court. Id. at 1. On September 21, 2018, the Court denied Plaintiff's Motion for Preliminary Injunction. September 21, 2018, Order 1, ECF No. 35.
Finally, on April 10, 2019, Defendants filed the instant Motion for Summary Judgment. Plaintiff filed a timely Response, to which Defendants filed a timely reply. The motion is now ripe for consideration.
II. DISCUSSION
A. Standard
A court must enter summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Weaver v. CCA Indus., Inc. , 529 F.3d 335, 339 (5th Cir. 2008). "A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the lawsuit under governing law." Sossamon v. Lone Star State of Tex. , 560 F.3d 316, 326 (5th Cir. 2009) (quoting Hamilton v. Segue Software, Inc. , 232 F.3d 473, 477 (5th Cir. 2000) (per curiam)). A dispute about a material fact is genuine only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ; Ellison v. Software Spectrum, Inc. , 85 F.3d 187, 189 (5th Cir. 1996).
"[The] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex , 477 U.S. at 323, 106 S.Ct. 2548 ; Wallace v. Tex. Tech. Univ. , 80 F.3d 1042, 1046–47 (5th Cir. 1996). To show the existence of a genuine dispute, the nonmoving party must support its position with citations to "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ..., admissions, interrogatory answers, or other materials[,]" or show "that the materials cited [by the movant] do not establish the absence ... of a genuine dispute, or that [the moving party] cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c).
The court resolves factual controversies in favor of the nonmoving party; however, factual controversies require more than "conclusory allegations," "unsubstantiated assertions," or "a ‘scintilla’ of evidence." Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). Further, when reviewing the evidence, the court must draw all reasonable inferences in favor of the nonmoving party, and may not make credibility determinations or weigh evidence. Man Roland, Inc. v. Kreitz Motor Express, Inc. , 438 F.3d 476, 478–79 (5th Cir. 2006) (citing Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) ). Thus, the ultimate inquiry in a summary judgment motion is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson , 477 U.S. at 251–52, 106 S.Ct. 2505.
B. Applicable Law
Plaintiff asserts two claims in his Amended Complaint. Principally, he seeks a declaration setting aside the foreclosure sale that took place on November 7, 2017, under the Texas Uniform Declaratory Judgments Act ("TDJA"), Tex. Civ. Prac. & Rem. Code § 37.004(a). Am. Compl. ¶¶ 19–20, ECF No. 26. In the alternative, he brings a Texas common law wrongful foreclosure action for monetary damages. Id. ¶¶ 22, 30. As the bases for both causes of action, Plaintiff asserts several violations of Texas statutes and contractual rights that he claims under the Deed of Trust. Subject matter jurisdiction in this case is based on 12 U.S.C. § 1452(f), which confers original and removal jurisdiction in the federal courts over all actions to which FHLMC is a party. June 30, 2018, Order 2, ECF No. 13. "[F]ederal courts ... apply state substantive law and federal procedural law" when exercising jurisdiction over cases that require them to adjudicate state law claims. Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996) (citing Erie R.R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) ); see also Fed. Home Loan Mortg. Corp. v. Scottsdale Ins. , 316 F.3d 431, 437, 443 (3d Cir. 2003) (applying state substantive law to state law claims where jurisdiction was based on 12 U.S.C. § 1452(f) ). Generally, procedural law encompasses rules that determine "form[s] and mode[s] of enforcing" rights, whereas substantive law encompasses statutes and court decisions that contain "the definition of state-created rights and obligations." Byrd v. Blue Ridge Rural Elec. Co-op. , 356 U.S. 525, 535, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958).
Defendants' Motion for Summary Judgment suggests that Plaintiff may have also brought a trespass to try title claim under section 22.001(a) of the Texas Property Code. Mot. 7. A trespass to try title action "is typically used to clear problems in chains of title or to recover possession of land unlawfully withheld from a rightful owner." Martin v. Amerman , 133 S.W.3d 262, 265 (Tex. 2004). Texas courts have admitted to some "confusion" in delineating the respective purviews of the TDJA and trespass to try title statutes. Id. at 268. However, Texas courts of appeals have held that actions seeking the rescission of foreclosure sales were properly brought under the TDJA. Alanis v. U.S. Bank , 489 S.W.3d 485, 501–03 (Tex. App. 2015) ; Cadle Co. v. Ortiz , 227 S.W.3d 831, 833, 837 (Tex. App. 2007). Here, Plaintiff expressly brings his Amended Complaint under the TDJA. Am. Compl. ¶ 19. Defendants do not cite anything—and the Court finds nothing—in Plaintiff's Amended Complaint from which to infer a trespass to try title action. And, because Plaintiff seeks to set aside the foreclosure sale, the TDJA provides the appropriate form. See Alanis , 489 S.W.3d at 501–03 ; Cadle Co. , 227 S.W.3d at 833, 837. Therefore, the Court finds that Plaintiff has not brought a trespass to try title claim in this case and analyzes it no further.
The parties do not dispute that Plaintiff's wrongful foreclosure action for damages is a "state-created right" to which the Court applies state law. Id. However, Defendants argue that the TDJA is not the appropriate form for Plaintiff to seek declaratory relief in federal court. Reply 7. They argue that Plaintiff therefore "fails to state a claim upon which relief can be granted." Id.
The TDJA is not a wholly independent cause of action, but rather a "theory of recovery," which must be "predicated upon" the assertion of some underlying substantive right. Sid Richardson Carbon & Gasoline Co. v. Interenergy Res., Ltd. , 99 F.3d 746, 752 n.3 (5th Cir. 1996). Because it is merely a vehicle for vindicating other rights, it follows that the TDJA is considered state procedural law. Utica Lloyd's of Tex. v. Mitchell , 138 F.3d 208, 210 (5th Cir. 1998). After removal to federal court, a TDJA claim is converted to a claim under the corresponding federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 – 02 ("FDJA"). Edionwe v. Bailey , 860 F.3d 287, 294 n.2 (5th Cir. 2017). Like the TDJA, the FDJA "does not create substantive rights," but rather "enhances the remedies available" to rectify cognizable legal injuries. Calderon v. Bank of America , 941 F. Supp. 2d 753, 768 (W.D. Tex. 2013) (citing Skelly Oil Co. v. Phillips Petroleum Co. , 339 U.S. 667, 671–72, 70 S.Ct. 876, 94 L.Ed. 1194 (1950) ; Appling Cty. v. Mun. Elec. Auth. of Ga. , 621 F.2d 1301, 1303 (5th Cir. 1980) ).
Here, the legal injuries claimed by Plaintiff in support of his request for a declaratory judgment turn on violations of the Texas Property Code and the terms of the Deed of Trust. These are "state-created rights and obligations," governed by the Texas state courts and state legislature. Byrd , 356 U.S. at 535, 78 S.Ct. 893. Thus, while the FDJA is the proper "mode" by which the Court would provide the declaratory relief that Plaintiff requests, id. , Texas contract and property law determine whether Plaintiff's rights have been infringed in such a way as to warrant that declaratory relief. See, e.g. , Calderon , 941 F. Supp. 2d at 757, 762–63, 768–69 (applying Texas state property law to adjudicate a claim for a declaration in federal court that the defendant had no right to foreclose on the plaintiff's home). Rather than dismiss Plaintiff's TDJA claim outright, as urged by Defendants, the Court converts it to an FDJA action and applies Texas law to the determination of its merits.
C. Standing
As a further preliminary matter, Defendants argue that Plaintiff, a non-party to the Note and Deed of Trust, lacks standing to challenge the validity of the foreclosure. Reply 4. In their Motion for Summary Judgment, Defendants argue only that Plaintiff lacks standing to challenge assignments of the Deed of Trust, Mot. 6, but in their Reply brief they assert that Plaintiff "lacks standing to bring this lawsuit" altogether. Reply 4. That is, they argue that Plaintiff has standing to seek neither damages nor declaratory relief, and that he lacks standing to assert both statutory and contractual rights.
To that end, Defendants cite a Texas court of appeals decision for the proposition that "[a]s a general rule, a non-party to a contract cannot enforce the contract unless she is an intended third-party beneficiary." Vazquez v. Deutsche Bank , 441 S.W.3d 783, 787 (Tex. App. 2014). However, this is, as the quoted passage indicates, "a general rule," and one that is not applicable here. Where a "third party has a property interest, whether legal or equitable, that will be affected by [a foreclosure] sale, the third party has standing to challenge such a sale to the extent that its rights will be affected by the sale." Goswami v. Metro. Sav. and Loan Ass'n , 751 S.W.2d 487, 489 (Tex. 1988). This doctrine applies where, as here, the alleged wrongful foreclosure sale has already taken place. See id. Property interests are broadly defined for the purposes of standing, merely requiring "some evidence" of the purchase of an interest in the land subject to foreclosure. Schlotte v. Option One Mortg. Corp. , No. 09-11-00208-CV, 2012 WL 1951125, at *2 (Tex. App. May 31, 2012). Courts can find an equitable interest sufficient to confer standing to challenge a foreclosure without making "specific conclusions as to the validity of" a facially valid deed. See JB Mortg. Co. v. Haisler , No. 1:13-CV-204-LY, 2017 WL 10900097, at *5–6 (W.D. Tex. Sept. 25, 2017) (citing Goswami , 751 S.W.2d at 489 ). Furthermore, "the failure to record a written deed does not divest the purchaser of title" or destroy the purchaser's claim to at least some equitable property interest. Peterson v. Black , 980 S.W.2d 818, 822 (Tex. App. 1998) (citing Simonds v. Stanolind Oil & Gas Co. , 134 Tex. 332, 114 S.W.2d 226, 235 (1938) ).
Both Plaintiff's FDJA claim and his wrongful foreclosure claim challenge the validity of the November 7, 2017, foreclosure sale of the Property. Therefore, Plaintiff has standing to assert these claims if he has produced "some evidence" of an interest in the Property that is affected by the sale. Schlotte , 2012 WL 1951125, at *2. Plaintiff has submitted evidence of a deed, executed to him by Ms. Guerrero in 2004. Resp. Ex. F. Defendants do not question the validity of this deed, merely claiming that it was never recorded. Reply 2. Regardless of whether it was recorded, this deed gave Plaintiff at least an equitable interest in the Property. Peterson , 980 S.W.2d at 822. This interest was threatened when the Property was sold to FHLMC. Goswami , 751 S.W.2d at 489. Because he has an interest in the Property which was affected by the foreclosure sale, Plaintiff has standing to bring his FDJA and wrongful foreclosure claims to challenge the validity of that sale. Id.
D. The Merits of Plaintiff's Claims
Defendants next argue for summary judgment on the substance of Plaintiff's FDJA and wrongful foreclosure claims. As described above, Plaintiff's FDJA claim requires him to show some violation of his "substantive rights." Calderon , 941 F. Supp. 2d at 768. Because the declaration requested is one setting aside the foreclosure sale, the rights raised by Plaintiff must concern the foreclosure process in order to warrant that relief. See Alanis v. U.S. Bank , 489 S.W.3d 485, 501–02, 510–11 (Tex. App. 2015). Similarly, in order to prevail on a claim for wrongful foreclosure, Plaintiff must show "(1) a defect in the foreclosure sale proceedings ; (2) a grossly inadequate selling price; and (3) a causal connection [between the two.]" Sauceda v. GMAC Mortg. Corp. , 268 S.W.3d 135, 139 (Tex. App. 2008) (emphasis added) (citing Charter Nat'l Bank v. Stevens , 781 S.W.2d 368, 371 (Tex. App. 1989) ). Foreclosure sale proceedings may be defective for the failure to follow procedures mandated by statute or by the terms of a relevant contract, such as a deed of trust. See Alanis , 489 S.W.3d at 502 ; Montenegro v. Ocwen Loan Serv., LLC , 419 S.W.3d 561, 570 (Tex. App. 2013).
Plaintiff does not clearly delineate the "substantive rights" that support his FDJA claim. Calderon , 941 F. Supp. 2d at 768. Nor does he lay out precisely which "defect[s] in the foreclosure sale proceedings" undergird his wrongful foreclosure claim. Sauceda , 268 S.W.3d at 139. His pleadings and briefing are difficult to follow and rife with errors and inconsistencies. Nonetheless, in light of the mandate to construe pleadings "so as to do justice," Fed. R. Civ. P. 8(e), the Court extracts the following allegations of rights-violations-cum -defects in support of both claims: 1) Plaintiff exercised the right to timely cure default under the Deed of Trust, such that Nationstar's subsequent foreclosure was wrongful; 2) Nationstar did not provide Plaintiff with adequate notice of the foreclosure sale, as required by section 51.002(b)(3) of the Texas Property Code, making the subsequent foreclosure wrongful; 3) one or more assignments of the Deed of Trust executed prior to the foreclosure sale were void, so that Nationstar was not a Lender under the Deed of Trust and could not initiate foreclosure proceedings; and 4) Nationstar wrongfully executed an assignment of the Deed of Trust to Specialized Loan Servicing, LLC ("SLS") after the foreclosure sale had already taken place.
The Court addresses whether a genuine dispute of material fact exists with respect to each of the bases for Plaintiff's claims in turn.
1. Lack of required acceleration notices and timely cure of default
Defendants argue that they have provided all notices required to accelerate the loan balance after default. Mot. 1, n.5. They argue that because Plaintiff was never made a party to the Deed of Trust, he had no right to receive any notices prior to acceleration of the debt. Mot. 8–9; Reply 4–5. In response, Plaintiff seems to argue that Nationstar was obligated to send him these notices, and that their failure to do so rendered the subsequent acceleration invalid. Resp. 2. He states that his November 2, 2017, payment of $6,918.65 covered all outstanding arrearages at that time, as well as additional payments "for reinstatement of the mortgage and attorney's fees." Id. ; Am. Compl. ¶ 15. He argues that because the debt was never properly accelerated, he effectively exercised his cure rights with the November 2 payment. Resp. 2.
Under Texas law, a mortgagee intent on foreclosing on a delinquent debtor must first provide notice of "at least 20 days to cure the default." Tex. Prop. Code § 51.002(d). If the mortgagee intends to call due the entire debt after the cure period expires, the mortgagee must also send notice of their intent to accelerate. Ogden v. Gibraltar Sav. Ass'n , 640 S.W.2d 232, 233 (Tex. 1982). Lastly, the mortgagee must provide the debtor with an additional notice when the cure period has elapsed, and the debt has been accelerated. Shumway v. Horizon Credit Corp. , 801 S.W.2d 890, 893 (Tex. 1991).
Critically, however, these notices need only be sent to debtors who are "parties to the deed of trust," unless the instrument itself provides otherwise. Montenegro , 419 S.W.3d at 570. "The provisions as to notice [of default and acceleration] set forth in a deed are controlling in the absence of an overriding statutory provision, and must be strictly complied with." Stanley v. CitiFin. Mortg. Co. , 121 S.W.3d 811, 818 (Tex. App. 2003). Where a deed of trust contains procedures that a purchaser of the encumbered property must follow in order to assume the original borrower's rights under the instrument, they must also be strictly adhered to. Montenegro , 419 S.W.3d at 571. This is the case even if the mortgagee learns that another person has assumed the original borrower's responsibility for payments on the note. Id. at 570.
Here, Plaintiff does not dispute that notice of default, right to cure, and intent to accelerate, followed by notice of acceleration, were sent to Ms. Guerrero. See Resp. 11 (admitting Defendants' PUF ¶¶ 6–10); Mot. Exs. A-6–A-7 (the notices). Plaintiff does, however, dispute whether he is properly considered a Borrower, with all concomitant rights under the Deed of Trust. See Resp. 10–11 (denying Defendants' PUF ¶ 3). Namely, he asserts the right to be sent the notices that were instead sent to the attention of Ms. Guerrero. If Nationstar failed to send required notices, then the debt would not have been properly accelerated and there would be a genuine dispute of material fact as to whether Plaintiff's November 2, 2017, payment was sufficient to cure default. See Ogden , 640 S.W.2d at 233. However, Plaintiff's name does not appear on the Note and Deed of Trust as "Borrower." Mot. Exs. A-1, A-2. Rather, Ms. Guerrero's does. Id. Nor has Plaintiff presented evidence that he complied with the applicable terms of the Deed of Trust, which must be strictly followed for Plaintiff to assume Ms. Guerrero's rights thereunder. See Montenegro , 419 S.W.3d at 571. The Deed of Trust provides that "any Successor in Interest of Borrower who assumes Borrower's obligations under this Security Instrument in writing, and is approved by Lender , shall obtain all of Borrower's rights and benefits under this Security Instrument." Mot. Ex. A-2 ¶ 13 (emphasis added). While Plaintiff may have assumed Ms. Guerrero's obligations under the Deed of Trust by way of the "Assumption Wrap Around Warranty Deed," there is no evidence in the record that a "Lender" in the chain of assignments was notified that Plaintiff had assumed Ms. Guerrero's obligations or that any Lender gave approval for him to do so.
Plaintiff also appears to acknowledge that he personally received at least one of these notices. First, Plaintiff alleges that he "was not provided any notice of default, right to cure, or notice of acceleration." Resp. 2. Later in the same brief, however, Plaintiff admits that he did, in fact, receive the October 2 notice of acceleration, albeit addressed to Ms. Guerrero. Id. at 7.
A careful and generous reading of the Amended Complaint also suggests a claim that Plaintiff exercised the "Right to Reinstate After Acceleration" contained in the Deed of Trust, Mot. Ex. A-2 ¶ 19, although neither party ever explicitly refers to the clause in their briefing. This provision gives the Borrower the ability to pay an amount less than the full balance due on the Note and reinstate the mortgage under certain circumstances, even after acceleration. Id. The right expires "prior to the earliest of: (a) five days before sale of the Property[, (b) according to Texas law,] or (c) entry of judgment enforcing" the Deed of Trust. Id. A borrower exercising the right must cure default, pay certain expenses, and comply with other conditions. Id. If Plaintiff were the Borrower under the Deed of Trust, there may be a genuine dispute of material fact as to whether he exercised this right. The record shows that Plaintiff tendered $6,918.65 to Nationstar on November 2, 2017, exactly five days prior to the November 7 foreclosure sale. Plaintiff alleges that he made this payment "at the insistence of Defendant Nationstar." Am. Compl. ¶ 4. The Court notes that Plaintiff has not brought a claim for misrepresentation by Nationstar or its agents as to the effect of Plaintiff tendering $6,918.65 on or before November 2, 2017, and expresses no opinion as to the merits of such a claim.
In fact, the evidence seems to imply the opposite; not only that no approval had been granted, but that Plaintiff knew as much. Certified checks that Plaintiff himself drafted for payment to Nationstar's d/b/a "Mr. Cooper" on November 2, 2017, include a memo referring to the loan as "Guerrero." Resp. Ex A. Plaintiff's use of Guerrero's name, the person designated as "Borrower" on the Deed of Trust, indicates that Plaintiff was aware he had not communicated—let alone obtained approval for—his assumption of obligations under the Deed of Trust to Nationstar or any of its predecessors in interest.
The reasoning of the United States District Court for the Southern District of Texas in a strikingly analogous case, where the plaintiff had purchased a property and assumed loan payments without consent of the lender, is helpful. See Olivares v. Pyatt , No. 2:15-cv-81, 2015 WL 12751698, at *1 (S.D. Tex. Aug. 26, 2015). There, the Court found "no authority for the proposition that, by some operation of law, [the plaintiff] should be substituted for the [original borrowers] with respect to contractual rights they may have under their mortgage merely because he purchased the property from them, subject to the mortgage lien." Id. at *3. Indeed, an abundance of authority from Texas courts of appeals indicates that in addition to purchasing the property or making mortgage payments, lender approval as mandated by the Deed of Trust is also required for the purchaser to obtain the borrower's contractual rights thereunder. 402 Lone Star Prop., LLC v. Bank of America , No. 03-13-00322-CV, 2014 WL 4058715, at *3 (Tex. App. Aug. 12, 2014) ("To become a party to a deed of trust and obtain the rights of a borrower under a deed of trust, such as the right to notice and reinstatement, a purchaser of real property must take the affirmative steps of requesting and receiving written approval from the lender to assume the borrower's obligations under the deed of trust."); Montenegro , 419 S.W.3d at 571 ; Schlotte , 2012 WL 1951125, at *4 ; Stanley , 121 S.W.3d at 818 ; cf. Sanders v. Shelton , 970 S.W.2d 721, 726–27 (Tex. App. 1998) (holding that a subsequent purchaser, as a non-party to the deed of trust, did not have "the right to be informed of a substitution of trustees," a right created by statute and the deed of trust).
Here, Plaintiff purchased the property and made mortgage payments, but failed to take the critical last step of obtaining Lender approval. Because of this omission, Plaintiff is not a Borrower under the Deed of Trust. See 402 Lone Star Prop., LLC , 2014 WL 4058715, at *3. The Deed of Trust gives only the Borrower the right to notice of default, right to cure, intent to accelerate, and acceleration. Mot. Ex. A-2 ¶ 22. And, Texas law does not independently provide these notice rights to non-parties to a deed of trust, such as Plaintiff. See Montenegro , 419 S.W.3d at 570. Because it is undisputed that the notices required for acceleration of the loan balance were provided to the only named Borrower, Ms. Guerrero, the debt was properly accelerated. Id. at 570–71.
Further, as with notice rights, the Deed of Trust only gives the Borrower the right to reinstatement through partial payment after acceleration has occurred. Mot. Ex. A-2 ¶ 19. Because the debt had already been properly accelerated and because Plaintiff was not the Borrower, he had no right to reinstate the loan when he made his November 2, 2017, payment. Therefore, Defendants are entitled to judgment as a matter of law that no timely cure or reinstatement occurred prior to the foreclosure sale of the Property.
2. Failure to provide adequate notice of the foreclosure sale
Defendants next argue that they have complied with all requirements for providing notice of the foreclosure sale itself. Mot. 8–10. Plaintiff, in response, alleges that he did not receive twenty-one days' notice of the foreclosure sale, as required by Texas law, Tex. Prop. Code § 51.002(b)(3). Am. Compl ¶ 18; Resp. 12. Unlike the notices discussed above, which are either sparsely outlined in the Texas Property Code or established by common law, the requirements for noticing a foreclosure sale are laid out in some detail in the statute. See Stanley , 121 S.W.3d at 817–18.
However, as with the pre-foreclosure notices described above, notice of a foreclosure sale need only be sent to "each debtor who, according to the records of the mortgage servicer of the debt, is obligated to pay the debt." Tex. Prop. Code § 51.002(b)(3). This statutory provision has been interpreted to require that notice of sale be sent to "the parties named on the requisite documents as the debtors, and not to other parties, known or unknown." Rodriguez v. Ocwen Loan Serv., LLC , 306 F. App'x. 854, 855–56 (5th Cir. 2009) (quoting Casstevens v. Smith , 269 S.W.3d 222, 229 (Tex. App. 2008) ); see also Nat'l Commerce Bank v. Stiehl , 866 S.W.2d 706, 708 (Tex. App. 1993) ; Lawson v. Gibbs , 591 S.W.2d 292, 295 (Tex. App. 1979). As discussed in the preceding section, it is undisputed that Ms. Guerrero, and not Plaintiff, is named as the debtor on the Deed of Trust and in Defendants' other records.
It is also undisputed that Nationstar sent notice of the foreclosure sale via certified mail, addressed to Ms. Guerrero at the Property. See Resp. 11 (admitting Defs.' PUF ¶ 11, that such notice was sent); Mot. Ex. A-8 (copy of the notice). Whether Ms. Guerrero still lives at the Property or received such notice is irrelevant; rather, the controlling consideration is whether the notice was "deposited in the U.S. Mail, postage prepaid, addressed to the debtor at the debtor's last known address as shown by the records of the debt holder." Stanley , 121 S.W.3d at 817. There is no requirement of actual notice to the debtor. Id. (citing Lambert v. First Nat'l Bank , 993 S.W.2d 833, 835 (Tex. App. 1999) ).
Because it is undisputed that Nationstar deposited in the mail a notice of the foreclosure sale addressed to Ms. Guerrero at her last known address as shown in its records, and because nothing more is required under Texas law, there is no genuine dispute of fact as to whether they provided adequate notice of the foreclosure sale. Stanley , 121 S.W.3d at 817. Defendants are entitled to judgment as a matter of law that the foreclosure sale was properly noticed in accordance with the terms of the Texas Property Code.
3. Pre-foreclosure assignments
Defendants next argue that Plaintiff's allegations of defects in the chain of assignments of the Deed of Trust are baseless and unsupported by the evidence. Mot. 7, n.19. Plaintiff alleges in his Amended Complaint that the Deed of Trust was originated with Sirva Mortgage, Inc. ("Sirva"). Am. Compl. ¶ 8. He claims that subsequent assignments of the Deed of Trust were invalid because the first recorded transfer was executed by an entity other than Sirva. Id. ¶ 9. Defendants argue that Sirva has never had any interest in the Property or Deed of Trust, and that "[i]t is not known why Plaintiff references Sirva Mortgage." Mot. 7, n.19. They identify documents in the record showing National City Mortgage Company as the original mortgagee, id. Ex. A-1, and a chain of facially valid assignments ultimately transferring the Deed of Trust to Nationstar, id. Exs. A-3–A-5.
Plaintiff points to no evidence showing that Sirva ever had any relationship to the Property or the Deed of Trust. On summary judgment, Plaintiff does not mention Sirva. In his response brief, he does not make any arguments questioning Nationstar's chain of title or the validity of any pre-foreclosure assignments. Furthermore, Plaintiff admits that "Nationstar obtained all rights and interests under the deed of trust." See Resp. 11 (admitting Defs.' PUF ¶ 4). Because Plaintiff has failed to produce any evidence of Sirva's interest in the Deed of Trust and admits that "Nationstar obtained all rights and interests" thereunder, id. , Defendants are entitled to judgment as a matter of law that Nationstar properly held the Deed of Trust at the time of foreclosure.
In the Amended Complaint, Plaintiff also alleges receiving notice of default from CitiMortgage, another non-party with no apparent relationship to this controversy. Am. Compl. ¶ 21. No reference to CitiMortgage appears in Plaintiff's subsequent filings.
4. Post-foreclosure assignment
As his final basis for relief, Plaintiff alleges that "[a]fter the foreclosure, on January 30, 2018, a transfer was filed among the El Paso County Deed Records, transferring the deed of trust from NationStar Mortgage, LLC to Specialized Loan Servicing, LLC, ‘SLS[.]’ " Am. Compl. ¶ 13. He further alleges that "even after the foreclosure, SLS both demanded and accepted payments from [Plaintiff]." Id. ¶ 14. Defendants do not acknowledge or dispute these contentions, and they may be true. If true, these activities may also be unlawful. Texas law permits actions for deficiency judgments where a non-judicial foreclosure sale yields less than the unpaid balance of the secured debt, subject to certain other requirements. Tex. Prop. Code § 51.003(a). However, a court action is the exclusive means of recourse to recover a deficiency; "there is no mechanism available for the lender to collect the deficiency through non-judicial means." Marhaba Partners v. Kindron Holdings, LLC , 457 S.W.3d 208, 215 (Tex. App. 2015). To the extent that Nationstar and SLS were attempting to recover a deficiency from Plaintiff after the foreclosure sale, contacting him personally to demand payment would not be the lawful means of doing so. See id. If, on the other hand, the foreclosure sale yielded as much as or more than the outstanding balance on the loan, Plaintiff would no longer owe any debt under the Note. If this is the case and Nationstar or SLS sought to collect a debt that had already been satisfied, they may be liable for "misrepresenting the character, extent, or amount of a consumer debt." See Tex. Fin. Code § 392.304(a)(8).
Plaintiff has not submitted evidence of this transfer of the deed of trust. However, the Court takes judicial notice that a Corporate Assignment of Deed of Trust—duly recorded in the Public Records of Real Property in El Paso County, Texas—was executed on January 30, 2018, by which Nationstar transferred Sylvia Guerrero's Deed of Trust to SLS. Official Public Records Search , El Paso County, https://apps.epcounty.com/publicrecords/OfficialPublicRecords; see Fed. R. Evid. 201(b)(2) (permitting judicial notice of a fact that "can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned"); DTND Sierra Investments LLC v. Bank of New York Mellon Trust Co., N.A. , 958 F. Supp. 2d 738, 744 (W.D. Tex. 2013) ("The Court also takes judicial notice of the Deed of Trust and the assignment document because they have been recorded and are therefore matters of public record.").
However, Plaintiff has not identified any authority that would make these alleged post-foreclosure improprieties the basis for a wrongful foreclosure claim or a declaration setting aside the foreclosure sale. In an analogous case, evidence of similar post-foreclosure activity was held to have no bearing on the validity of the preceding foreclosure. See Alanis , 489 S.W.3d at 510–11. The Alanis plaintiff's home had been foreclosed and sold in January 2010. Id. at 510. Then in August 2013, less than a month before trial in a lawsuit that included claims for wrongful foreclosure and a declaratory judgment setting aside the foreclosure sale, the plaintiff began to receive notices from a new mortgagee. Id. at 492, 510. She later learned that the new mortgagee had been assigned the deed of trust after the foreclosure. Id. at 510. She argued that this "constituted evidence of ... an unlawful attempt to compel her to make payments on a note and deed of trust on the subject property after it was purchased ... at the January 2010 foreclosure sale." Id. at 510–11. In affirming the denial of the plaintiff's motion for a new trial, the court of appeals distinguished the plaintiffs "claims at trial[, which] all revolved around the conduct of [the defendants] as it related to ... completing the foreclosure on her property," from the new evidence of wrongful "post-foreclosure activities." Id. at 511.
Here, Plaintiff has raised similar allegations of "an unlawful attempt to compel [him] to make payments" after the Property was foreclosed upon. Id. at 510. Nationstar and/or SLS may indeed have engaged in improper conduct by seeking to collect under the Note and Deed of Trust some three months after the foreclosure sale took place. See Tex. Fin. Code § 392.304(a)(8) ; Marhaba Partners , 457 S.W.3d at 215. Texas law may provide a remedy to consumers harmed by this sort of post-foreclosure debt collection activity, but the Court will not speculate as to the viability of other claims that Plaintiff may be able to bring against Nationstar or SLS. It suffices to say that such claims have not been brought here.
As to the two claims that are before the Court, the alleged post-foreclosure deed assignment and collection activity does not evince a deviation from the standards for conducting the foreclosure proceedings themselves, as provided by the Deed of Trust or Texas statutes. See Alanis , 489 S.W.3d at 510–11. Therefore, these activities do not constitute a "defect in the foreclosure sale proceedings," which must be shown for Plaintiff's wrongful foreclosure and declaratory judgment claims to survive. Sauceda , 268 S.W.3d at 139.
III. CONCLUSION
In sum, Plaintiff claims four violations of his substantive rights with respect to the foreclosure of the Property in support of his principle claim for a declaratory judgment setting aside the foreclosure sale. He raises the same four issues as defects in the foreclosure proceedings, in support of his alternative claim for damages for wrongful foreclosure. For the reasons set forth above, the Court finds that no genuine dispute of material fact exists as to any of these four bases for relief, and that Defendants are entitled to judgment as a matter of law on both of Plaintiff's claims. See Celotex Corp. , 477 U.S. at 322, 106 S.Ct. 2548.
For the foregoing reasons, Defendants' Motion for Summary Judgment, ECF No. 49, is GRANTED.