Opinion
6:22-CV-00884-ADA-JCM
03-14-2023
U.S. BANK NAT'L ASS., AS TRUSTEE FOR MASTR ASSET-BACKED SECURITIES TRUST 2006-NC2 MORTGAGE PASS THOUGH CERTIFICATES SERIES 2006-NC2, Plaintiff, v. VICKIE JO JEFFERSON, et al, Defendants.
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
JEFFREY C. MANSKE UNITED STATES MAGISTRATE JUDGE
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 Plaintiff's Motion for Default Judgment (ECF No. 15). For the following reasons, the Court recommends Plaintiff's Motion for Default Judgment be GRANTED.
I. BACKGROUND
Plaintiff U.S. Bank National Association, as Trustee for MASTR Asset-Backed Securities Trust 2006-NC2 Mortgage Pass Through Certificates Series 2006-NC2 files this Motion for Default Judgment against Defendants Brandon J. Richardson, Elizabeth D. Hicks, Pamela D. Brown, and Audi C. Richardson. Plaintiff sued Defendants on August 25, 2022, seeking a declaratory judgment to foreclose on real property. Pl.'s Compl. (ECF No. 1) at ¶13. On the same day, Plaintiff requested summons. Id. at 1-2.
This proceeding concerns real property located at 413 Williams Street, Marlin, Texas 76661 (“Property”). Id. at ¶ 9. Bobby Richardson and Vickie Jefferson executed a Texas Home Equity Note in the principal amount of $56,000 (“Note”) on May 13, 2006. Id. at ¶ 20. The Note was originally payable to New Century Mortgage Corporation as lender on the loan secured by the Property. Id. Along with the Note, Bobby Richardson and Vickie Jefferson executed a Texas Home Equity Security Instrument (“Security Instrument”) granting New Century, its successors and assigns, a security interest in the Property. Id. at ¶ 21. The Security Instrument was recorded in the official public records of Falls County, Texas in book 191, page 485 on May 29, 2006. Id. New Century transferred and assigned the Loan Agreement to Plaintiff. Id. at ¶ 22. The assignment was recorded in the official public records of Falls County in book OR 00347, page 00397 on August 3, 2018. Id. Plaintiff is the current legal owner and holder of the Note. Id. at ¶ 23.
Bobby Richardson died on December 23, 2020. Id. at ¶24. Plaintiff alleges upon information and belief that no probate was ever opened for Bobby Richardson. Id. Thus, his heirs, Defendants in this action, acquired his interest in the Property immediately upon his death, subject to the Loan Agreement debt. Id.
Plaintiff filed this lawsuit seeking a declaration from the Court that it is the owner and holder of the Note, beneficiary of the Security Instrument, and authorized to enforce the power of sale in the Security Instrument through foreclosure of the Property. Id. at ¶ 31. Plaintiff also seeks a declaration that it has a statutory probate lien against the Property under the terms of the Agreement. Id. at ¶ 34. Plaintiff further seeks non-judicial foreclosure of the Property, or alternatively judicial foreclosure, and to sell the Property at a public auction. Id. at ¶ 37, 39, 42. Plaintiff requests a declaration and Judgment that Plaintiff would acquire all of Defendants' right, title, and interest in the Property, and a writ of possession against any occupant of the Property. Id. at ¶ 44, 46. Finally, Plaintiff requests damages for reasonable attorney's fees. Id. at ¶ 31.
Plaintiff served Defendants Brandon Richardson, Pamela Brown, and Audi Richardson with summons on August 25, 2022. Def.'s Mot. Default J. at ¶ 3, 5, 6. Their answers or responses were due September 15, 2022. Id. Plaintiff served Defendant Elizabeth Hicks on August 29, 2022. Id. at ¶ 4. Her answer or response was due on September 19, 2022. Id. None of the Defendants have appeared or otherwise defended the suit. Id. at ¶ 7. Exhibit A-1 shows that none of the Defendants are on active-duty military status. Id. at ¶ 10, citing Ex. A-1. Plaintiff filed Motion for Clerk's Entry of Default against Defendants Brandon Richardson, Elizabeth Hicks, Pamela Brown, and Audi Richardson on September 27, 2022. (ECF No. 14). The Clerk entered default for those Defendants on October 19, 2022. (ECF No. 16). Plaintiff then filed this Motion for Default Judgment on September 27, 2022. Defendants have not responded.
II. RELEVANT LAW
Default may be entered against a party when it fails to answer or otherwise defend a suit. FED. R. CIV. P. 55. THE FOLLOWING THREE STEPS MUST BE FOLLOWED TO OBTAIN A DEFAULT JUDGMENT: (1) DEFAULT BY THE DEFENDANT; (2) ENTRY OF DEFAULT BY THE CLERK; AND (3) ENTRY OF DEFAULT JUDGMENT BY THE COURT. N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). To enter default judgment, courts typically determine whether default judgment is appropriate by considering the Lindsey v. Prive Corp., 161 F.3d 886 (5th Cir. 1998) factors and whether the pleadings have a sufficient basis for judgment. Nautilus Ins. Co. v. A Best American Roofing, LLC, EP-18-CV-320-PRM, 2019 WL 1473140, at *2 (W.D. Tex. Apr. 3, 2019) (citing Lindsey, 161 F.3d at 893 and Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)); Yeti Coolers, LLC v. Zhejiang Zhuosheng Indus. & Trade Co., Ltd., 1:17-CV-821-RP, 2019 WL 2568748, at *2 (W.D. Tex. June 21, 2019).
Plaintiff's well-pleaded factual allegations are taken as true after default, and default functions as an admission of those allegations. Jackson v. FIE Corp., 302 F.3d 515, 524-25 (5th Cir. 2002). Failure to answer or otherwise defend is admission of liability but not agreement with proposed damages. Id. An evidentiary hearing is not necessary to determine damages if damages are liquidated or mathematically calculable. United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979).
III. ANALYSIS
Plaintiff seeks a declaration that it is the owner and holder of the Note, beneficiary of the Security Instrument, and authorized to enforce the power of sale in the Security Instrument through foreclosure of the Property. Pl.'s Compl. at ¶31. The Court must determine first whether default judgment is appropriate, and second what relief, if any, should be awarded.
First, the Court must determine whether default judgment may be entered. To obtain default judgment, the following must occur: (1) default by the defendants; (2) entry of default by the Clerk; and (3) entry of default judgment by the court. N.Y. Life Ins. Co., 84 F.3d at 141. Defendants defaulted by failing to answer or otherwise defend this suit. FED. R. CIV. P. 55. Service was properly executed on defendants, yet they have not appeared, answered, or otherwise defended this suit. pl.'s req. for clerk's entry of default. the court clerk entered default against defendants on October 19, 2022. clerk's entry default. therefore, default judgment may be entered by the Court, and the Court must now determine whether default judgment is appropriate.
Under Lindsey, the Court must consider the following:
whether material issues of fact are at issue, whether there has been substantial prejudice, whether the grounds for default are clearly established, whether the default was caused by a good faith mistake or excusable neglect, the harshness of a default judgment, and whether the court would think itself obliged to set aside the default on the defendant's motion.Lindsey, 161 F.3d at 893. There are no issues of material fact, as Defendants failed to respond to Plaintiff's allegations in any manner. Defendants do not face prejudice as they have admitted to the allegations through their default. Jackson, 302 F.3d at 524. Grounds for default are “clearly established” as Plaintiff properly served Defendants and Defendants have not defended the suit. Defendants have not claimed any good faith mistake or excusable neglect. Id. Defendants failed to respond though they had time to do so, mitigating the harshness of default judgment. Id. While default judgment is not a favored remedy of the courts, no good cause is apparent which would oblige the Court to set aside default judgment. Id.; Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (per curiam). Therefore, the Lindsey factors weigh in favor of default judgment.
A. Plaintiff is entitled to a declaration of foreclosure on the Property.
Next, the Court must determine whether there is a sufficient basis in the pleadings for default judgment. Nishimatsu Const. Co., Ltd., 515 F.2d at 1206. Plaintiff seeks a declaratory judgment that Plaintiff has “standing and is authorized under the Security Instrument to enforce the power of sale contained in the Security Instrument through a non-judicial foreclosure” of the Property. Pl.'s Mot. at ¶16. To foreclose under a security instrument with a power of sale in Texas, the lender must demonstrate that: (1) a debt exists; (2) the debt is secured by a lien created under Art. 16, § 50(a)(6) of the Texas Constitution; (3) plaintiffs are in default under the note and security instrument; and (4) plaintiffs received notice of default and acceleration. Huston v. U.S. Bank. Nat. Ass'n, 988 F.Supp.2d 732, 740 (S.D. Tex. 2013) citing Tex. Prop. Code § 51.002.
The Court should declare that Plaintiff is entitled to foreclose against Defendants. Plaintiff is permitted to seek foreclosure of the lien on the property due to Defendants' failure to pay the debt under the Loan Agreement. Originally payable to New Century, Plaintiff is now the beneficiary of the Loan Agreement pursuant to a series of assignments. Pl.'s Compl. at ¶ 22-23. Plaintiff alleged that the creation of the Loan Agreement created a debt. Id. at ¶ 24. This debt is secured by a valid lien because the Security Instrument was recorded in the official public records of Falls County, Texas, in book 191, page 485. Id. at ¶ 21. Plaintiff alleges that the Loan Agreement fell into default because of the borrowers' failure to abide by the terms and make required payments. Id. at ¶ 27. After Defendants inherited the Property, they did not remedy this default. Id. at ¶ 28. Finally, Plaintiff asserts that notice of default and notice of acceleration were properly sent to Defendants. Id. By failing to answer the Complaint, Defendants have admitted these factual allegations. Therefore, the Court should declare that Plaintiff is entitled to foreclosure.
Plaintiff's pleadings provide a sufficient basis for default judgment. Therefore, Plaintiff established a sufficient basis in the pleadings for default judgment to be entered. Nishimatsu Const. Co., Ltd., 515 F.2d at 1206. Because the Lindsey factors weigh in favor of default judgment and the pleadings have a sufficient basis for default judgment to be entered, the Court may enter default judgment against Defendants.
B. Plaintiff is entitled to relief.
Finally, the Court must determine what relief should be awarded to Plaintiff. The Court does not need to hold an evidentiary hearing on the issue of damages if damages are liquidated or mathematically calculable. United Artists Corp., 605 F.2d at 857. Plaintiff does not seek monetary damages against Defendants. Pl.'s Mot. Default J. at ¶ 16. Instead, Plaintiff seeks the following relief: (1) judgment against Defendants for court costs; (2) judgment against Defendants for reasonable attorneys' fees as a further obligation owed unde the Note and Security Instrument; (3) Judgment declaring that Plaintiff is the owner and holder of the Note, beneficiary of the Security Instrument, and mortgagee as defined by Section 50.001 of the Texas Property Code; (4) judgment against Defendants declaring that the outstanding balance of the Note, prejudgment interest, post-judgment interest from the date of judgment until payment, and court costs are secured by the Security Instrument on the Property; and (5) judgment against Defendants declaring that Plaintiff may non-judicially foreclose on Defendants' interest on the Property. Id. at 7.
Plaintiff is entitled to all of the relief it seeks. Plaintiff requests that the award of attorneys' fees be made not as a money judgement against Defendants, but as a further obligation owed under the Loan Agreement in an amount to be determined in a post-judgment motion pursuant to Federal Rule of Civil Procedure 54(d)(2)(B)(i). Id. at ¶21. Plaintiff is entitled to attorneys' fees in an amount to be determined in a post-judgment motion.
IV. CONCLUSION
It is therefore RECOMMENDED Plaintiff's Motion for Default Judgment (ECF No. 15) be GRANTED. It is further RECOMMENDED that the proposed Final Default Judgment filed by Plaintiff at ECF No. 15-2 be entered in full.
V. OBJECTIONS
The parties may wish to file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are made. The District Court need not consider frivolous, conclusive, or general objections. 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 and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. 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).