Opinion
6:22-CV-01212-ADA-JCM
04-11-2024
VINCENTE V. RAMOS, Plaintiff v. SPECIALIZED LOAN SERVICING LLC, Defendant
JEFFREY C. MANSKE, UNITED STATES MAGISTRATE JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
TO: THE HONORABLE ALAN D ALBRIGHT, UNITED STATES DISTRICT JUDGE
This Report and Recommendation is submitted to the Court pursuant to 28 U.S.C. § 636(b)(1)(C), Fed.R.Civ.P. 72(b), and Rules 1(f) and 4(b) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges. Before the Court is Defendant Specialized Loan Servicing, LLC's Motion for Summary Judgment (ECF No. 11). For the reasons described below, the Court RECOMMENDS that Defendant's Motion be GRANTED.
I. BACKGROUND
This lawsuit involves the foreclosure of real property located in Bell County at 1204 Saddle Drive, Killeen, Texas 76543 (the “Property”). Def.'s Mot. at 3. Plaintiff admits he does not reside in the Property and currently resides at 501 Cheetah Trail, Harker Heights, Texas 76548. Id. at 2. The foreclosed property is not Plaintiff's homestead. Id. at 2.
On or about July 31, 2019, Plaintiff executed an Adjustable Rate Note in the original principal sum of $94,250 payable to ResMac, Inc., and a Deed of Trust, encumbering the Property with a lien in favor of Mortgage Electronic Systems, Inc. Def.'s Mot. at 4 citing Ex. A; Ex. B. On August 15, 2022, Mortgage Electronic Systems, Inc. assigned the Deed of Trust to Massachusetts Mutual Life Insurance Company. Def.'s Mot. at 4 citing Ex. C. Defendant serviced the loan for Massachusetts Mutual Life Insurance Company. Def.'s Mot. at 4. The Deed of Trust contains an optional acceleration clause allowing the lender to accelerate the mortgage loan upon Plaintiff's default. Def.'s Mot. at 4 citing Ex. B. Plaintiff defaulted under the Note. Id. at 4.
On or about February 6, 2022, Defendant sent Plaintiff a Notice of Default and Intent to Accelerate on behalf of SLS, informing Plaintiff of the default and allowing an opportunity to cure. Def.'s Mot. at 4 citing Ex. D. Plaintiff failed to cure the default. Id. at 4. On September 28, 2022, Defendant, through foreclosure counsel, sent a Notice of Acceleration and Notice of Substitute Trustee's Sale to Plaintiff via U.S. certified mail, return receipt requested. Id. at 4. On September 29, 2022, Defendant posted the Property for the November 1, 2022 foreclosure sale in Bell County, Texas. Id. at 4.
Plaintiff failed to seek injunctive relief or otherwise timely pay the accelerated indebtedness to prevent foreclosure. Def's Mot. at 5. On November 1, 2022, the Substitute Trustee sold the Property to the third-party with the highest bid of $105,000 at the foreclosure sale. Def's Mot. at 5, citing Ex. G.
On or about October 26, 2022, Plaintiff sued Defendant in state court to invalidate the foreclosure, alleging that Defendant violated the Texas Property Code, the Texas Business & Commerce Code, and the Texas Finance Code because Defendant did not produce the original Note. On November 22, 2022, Defendant removed the case to this Court. Dkt. No. 1.
Plaintiff was ordered to show cause as to why this case should not be dismissed for want of prosecution (ECF No. 7) by April 13, 2023 but did not file anything further. Defendant moved for summary judgment on August 11, 2023. Def.'s Mot. Plaintiff has not responded to Defendant's Motion or requested leave to file an untimely response. Accordingly, the movant's assertions of fact are considered undisputed. Fed.R.Civ.P. 56(e)(2). Since the Defendant's assertions of fact are undisputed, there is no genuine issue of material fact, and the Court may consider whether Defendant is entitled to judgment as a matter of law.
II. LEGAL STANDARD
Summary judgment is appropriate “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). A dispute is not genuine if the trier of fact could not, after an examination of the record, find for the nonmoving party. Matsushita Elec. Indus., Co. v. Zenith Radio Corp., 475 U.S. 574, 578 (1986). The moving party bears the burden of showing that no genuine dispute of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). That said, the moving party can satisfy its burden either by producing evidence negating a material fact or pointing out the absence of evidence supporting a material element of the nonmovant's claim. Duplantis v. Shell Offshore, Inc., 948 F.2d 187, 190 (5th Cir. 1991). Throughout this analysis, the Court must view the evidence and all factual inferences in a light most favorable to the party opposing summary judgment. Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014).
III. ANALYSIS
Plaintiff seeks declaratory judgment and a temporary restraining order to stop the foreclosure of real property in Killeen, Texas. Def.'s Mot. at 1. First, Plaintiff alleges that Defendant cannot enforce the terms of Plaintiff's mortgage loan unless and until Defendant produces the original Note and that Defendant violated the Texas Business & Commerce Code and the Texas Finance Code by failing to produce the Note. Id. at 10. Secondly, Plaintiff asserts that that Defendant violated the Texas Property Code by failing to record all transfers of lien prior to acceleration. Id. at 9.
Texas law does not require foreclosing parties to produce the original note to enforce the note's terms. Claims against a foreclosing party alleging that the foreclosing party must produce the original note to enforce it are called “Show Me the Note” claims. In Bittinger v. Wells Fargo Bank NA, 744 F.Supp.2d 619 (S.D. Tex. 2010), the court held that plaintiffs could not bring “Show Me the Note” claims when the lender produces a copy of the note. Foreclosure enforces the deed of trust, not the underlying note. Slaughter v. Qualls, 162 S.W.2d 671, 675 (Tex. 1942). Therefore, enforcing the note does not require judicial supervision and nothing requires the mortgage servicer to possess the original promissory note. Wells v. BAC Home Loans Servicing, L.P., Civ. Act. No. W-10-CA-00350, 2011 WL 2163987 (W.D. Tex. Apr. 26, 2011).
Under Texas law, a mortgage servicer can foreclose under a deed of trust, regardless of whether the servicer holds the original note. Id. A mortgage servicer is “the last person to whom the mortgagor has been instructed by the current mortgagee to send payment for the debt secured by a security instrument.” See Tex. Prop. Code Ann. § 51.0001(3). The mortgage servicer need only provide notice of default, with an opportunity to cure, and notice of the actual foreclosure sale. See Tex. Prop. Code § 51.002(b), (d). Here, Defendant, the mortgage servicer, provided notice of default with opportunity to cure, and notice of the foreclosure sale consistent with Tex. Prop Code § 51.002(b). Def.'s Mot. at 4, citing Ex. D, Ex. E, and Ex. F. Production of the original promissory note is not necessary. Wells v. BAC Home Loans Servicing, WL 2163987 *2.
Defendant, therefore, did not violate the Texas Business & Commerce Code by failing to produce the Note. Plaintiff fails to identify which section of the Texas Business and Commerce Code Defendant breached. Complaints ultimately failed to state a claim, and therefore the case should be dismissed. Ashcroft v. Iqbal, 556 U.S. 662 (2009).
Defendant also did not violate the Texas Property Code by failing to record all transfers of the lien prior to acceleration. Under Texas law, there is no requirement that the deed of trust assignment be recorded. Wells, 2010 WL 2163987, at *3. Rather, the “ability to foreclose on a deed of trust is transferred when the note is transferred, not when an assignment of deed of trust is either prepared or recorded.” JWD, Inc. v. Fed. Ins. Co., 806 S.W.2d 327, 329-30 (Tex.App.-Austin 1991, no writ). Additionally, failing to record “the deed of trust in the real property records of [the county] when [sic] the loan was originally made” or failing to record “the assignment of the deed of trust when it was executed, and the foreclosure before the assignment was recorded, do not as a matter of law give rise to a wrongful foreclosure claim.” Bittinger, 744 F.Supp.2d at 619. Accordingly, Plaintiff failed to state a claim that Defendants violated the Texas Business & Commerce Code or the Texas Finance Code. Therefore, Defendant is entitled to summary judgment.
Defendant also requests attorney's fees. Def's Mot. at 12-13. A response to motions other than responses to a discovery or case management motion shall be filed not later than 14 days after the filing of the motion, except as provided by Rule CV-15. Local Rule CV-7. Defendant filed its Motion for Summary Judgment on August 11, 2023 (ECF 11). Plaintiff's response to the Motion for Summary Judgment was due August 25, 2023. If there is no response filed within the time period prescribed by this rule, the court may grant the motion as unopposed. Id. Petitioner did not file a response within the time period prescribed by Rule CV-7, and therefore the court may grant Defendant's Motion, including Defendant's request for attorney's fees, as unopposed.
IV. CONCLUSION
For the reasons outlined above, the undersigned RECOMMENDS that the Defendant's Motion for Summary Judgment (ECF No. 11) be GRANTED, and that final Judgment be entered in favor of Defendant consistent with this Recommendation.
V. OBJECTIONS
The parties may wish to file objections to this Report and Recommendation. Parties filing objections must specifically identify those findings or recommendations to which they object. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report. See 28 U.S.C. § 636(b)(1)(C); Thomas v Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc). Except upon grounds of plain error, failing to object shall further bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas, 474 U.S. at 150-53; Douglass, 79 F.3d at 1415.