Jerry Mason v. Fremont Investment & Loan , 671 F. App'x 880 ( 2016 )

Case: 16-10249 Document: 00513754601 Page: 1 Date Filed: 11/10/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 16-10249 November 10, 2016
Summary Calendar
Lyle W. Cayce
Clerk
JERRY MASON,
Plaintiff - Appellant
v.
FREMONT INVESTMENT & LOAN; MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.; HSBC BANK USA, NATIONAL
ASSOCIATION, as Trustee for Nomura Home Equity Loan Inc., Asset-
Backed Certificates, Series 2006-FM1; OCWEN LOAN SERVICING, L.L.C.,
Defendants - Appellees
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:15-CV-1909
Before KING, DENNIS, and COSTA, Circuit Judges.
PER CURIAM:*
In September 2005, Plaintiff–Appellant Jerry Mason issued a $128,000
promissory note (the Note) to Defendant–Appellee Fremont Investment
(Fremont) in connection with his purchase of property located in Palmer, Texas
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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(Palmer property). The Note was secured by a Deed of Trust (Deed) granting
Fremont a lien on the Palmer property. The Deed named Defendant–Appellee
Mortgage Electronic Registration Systems, Inc. (MERS) 1 as the beneficiary of
the Deed “solely as the nominee for [Fremont] and [Fremont’s] successors and
assigns.” The Deed provided that it could be “sold one or more times without
prior notice to [Mason].” In May 2012, MERS transferred the Deed to
Defendant–Appellee HSBC Bank USA, N.A., as Trustee for Nomura Home
Equity Loan Inc., Asset-Backed Certificates, Series 2006-FM1 (HSBC).
In April 2015, Mason, proceeding pro se, filed suit in Texas state court
against various financial entities (Defendants) to determine the validity of his
mortgage. 2 Mason alleged breach of contract, slander of title, void assignment,
and fraud. His basic contention seemed to be that invalid transfers of the Note
and Deed following their issuance voided any rights that the Defendants now
claimed to the Palmer property. He requested relief in the form of a declaration
that the Defendants had no right to the Palmer property. The lenders removed
the case to the United States District Court for the Southern District of Texas,
see 28 U.S.C. §§ 1332, 1441, and then filed two motions to dismiss. 3 The court
issued a scheduling order setting a deadline of July 23, 2015, for Mason to
respond to the first motion to dismiss; August 28, 2015, for Mason to respond
to the second motion to dismiss; and September 1, 2015, for Mason to move to
1 “MERS is a membership organization whose members include residential mortgage
lenders and servicers, such as [Fremont].” Harris Cty. v. MERSCORP Inc., 791 F.3d 545,
549 (5th Cir. 2015). MERS operates an “electronic registry . . . that tracks servicing rights
and mortgage ownership in the United States.” Id. “When a borrower obtains a home loan
from a MERS-member bank, MERS is listed as the ‘beneficiary’ on the deed of trust. The
promissory note, however, is executed in favor of the bank.” Id.2 Specifically, Mason sued Fremont, MERS, HSBC, and Ocwen Loan Servicing.
SGGH, LLC (SGGH) replaced Fremont as a party because it had succeeded Fremont through
merger.
3 SGGH filed its motion to dismiss separately from the other Defendants.
2
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amend his complaint. Mason did not respond to the motions to dismiss by
these deadlines nor did he timely move to amend his complaint.
On October 8, 2015, the magistrate judge recommended granting the
Defendants’ motions to dismiss all Mason’s claims with prejudice. The
magistrate judge also recommended denying Mason leave to amend his claims
because they were all “premised on meritless theories that c[ould not] be
salvaged by repleading.” Mason did not file any objection to the magistrate
judge’s recommendation, and on October 28, the district court accepted the
magistrate judge’s recommendations in full and dismissed Mason’s claims with
prejudice. On November 13, Mason moved for reconsideration, explaining that
family illnesses prevented him from responding to the Defendants’ motions
and from objecting to the magistrate judge’s recommendations. He asked for
leave to amend his complaint, explaining that he “erroneously” included a
claim for slander of title in his complaint when he instead intended to include
a claim to quiet title. In response, the Defendants argued that the court should
deny Mason’s motion for reconsideration because it “failed to establish any
manifest error of law or newly-discovered evidence” and instead “solely raise[d]
arguments that could have been made before” the district court adopted the
magistrate judge’s recommendation. The Defendants also urged that Mason
not be allowed to amend his complaint because he “had plenty of time to
request leave” to amend between when the Defendants’ last motion to dismiss
was filed—July 29—and the deadline set in the briefing schedule for
requesting leave to amend—September 1.
Upon considering Mason’s motion for reconsideration, the magistrate
judge withdrew his earlier recommendation and issued amended findings of
fact and conclusions of law. In this new report the magistrate judge
recommended denying Mason’s motion for reconsideration because Mason had
failed to meet his burden to justify reconsideration and instead was merely
3
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“improperly attempting to relitigate his claims.” The magistrate judge also
recommended that Mason be denied leave to amend his complaint. Mason did
not object to any of the magistrate judge’s recommendations, and on February
24, 2016, the district court again accepted the recommendations in full and
ordered that Mason’s motion for reconsideration be denied. Mason timely
appealed.
Mason first argues that the district court erred in denying him leave to
amend his complaint. Although we normally review the denial of leave to
amend for abuse of discretion, Simmons v. Sabine River Auth. La., 732 F.3d
469, 478 (5th Cir. 2013), our review is limited to plain error when the
complaining party failed to object to the magistrate judge’s recommendation
after the party was warned of the consequences of failure to object. See
Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428 (5th Cir. 1996) (en
banc), superseded by statute on other grounds, 28 U.S.C. § 636(b)(1). 4 Here the
magistrate judge’s written report recommending denial of leave to amend
warned that “[f]ailure to file specific written objections [within 14 days of
service] will bar the aggrieved party from appealing the factual findings and
legal conclusions of the magistrate judge that are accepted and adopted by the
district court, except upon ground of plain error review.” Yet Mason did not
file any written objections to the magistrate judge’s recommendation.
Accordingly, we review the denial of leave to amend for plain error. To
establish plain error, a party must show that the error is clear, obvious, and
affects his or her substantial rights. See Lawrence v. Fed. Home Loan Mortg.
Corp., 808 F.3d 670, 675 (5th Cir. 2015).
4 28 U.S.C. § 636(b)(1) expanded the period during which a party could object to the
magistrate judge’s recommendation from 10 days after service to 14 days. It otherwise left
the holding of Douglass intact.
4
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Federal Rule of Civil Procedure 15 provides that leave to amend should
be granted “when justice so requires,” Fed. R. Civ. P. 15(a)(2), but when the
deadline set by the court for seeking leave to amend has expired, the more
stringent Rule 16(b) determines whether leave to amend should be granted.
See S&W Enters., L.L.C. v. SouthTrust Bank of Ala., N.A., 315 F.3d 533, 536
(5th Cir. 2003). Under Rule 16(b), “good cause” must exist to allow amendment
after the deadline has passed. Fed. R. Civ. P. 16(b)(4). Here, Mason did not
seek leave to amend until the September 1 deadline set in the scheduling order
had passed and the court had entered final judgment dismissing his complaint.
However the magistrate judge declined to apply Rule 16’s good cause standard
because he found that leave to amend was not justified even under the more
liberal Rule 15 standard. The magistrate judge found that all of the facts
supporting Mason’s proposed quiet title claim were available prior to dismissal,
and thus Mason failed to exercise diligence in bringing this claim. He also
found that, regardless, the proposed quiet title claim lacked merit.
We conclude this was not plain error. Although a pro se litigant should
generally be afforded an opportunity to amend his complaint before it is
dismissed, Brewster v. Dretke, 587 F.3d 764, 767–68 (5th Cir. 2009), denial is
nonetheless justified when the proposed amendment would be futile, Martin’s
Herend Imps., Inc. v. Diamond & Gem Trading U.S. Am. Co., 195 F.3d 765,
771 (5th Cir. 1999). An amendment is futile if “the amended complaint would
fail to state a claim upon which relief could be granted” under the standard of
Federal Rule of Civil Procedure 12(b)(6). Stripling v. Jordan Prod. Co., 234
F.3d 863, 873 (5th Cir. 2000). As the magistrate judge explained, Mason’s
proposed amendment—substitution of a quiet title claim for the slander of title
5
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claim 5—would be futile. Under Texas law, a plaintiff asserting a quiet title
claim has the burden of establishing his superior right to the property and
“[can]not rely on the weakness of his adversary’s title. Fricks v. Hancock, 45
S.W.3d 322, 327 (Tex. App. —Corpus Christi 2001, no pet.). But nowhere in
his complaint or his motion for reconsideration does Mason plead facts
demonstrating the superiority of his title to that of the Defendants. Instead,
Mason appears to challenge the validity of the assignment of the Note and
Deed to HSBC, but “arguments that merely question the validity of an
assignment of a deed of trust . . . are not a sufficient basis for a quiet title action
under Texas law.” Warren v. Bank of Am., N.A., 566 F. App’x 379, 383 (5th
Cir. 2014) (per curiam). Because Mason has not met his burden of showing
that he can “establish his own superior right to the property, such as by
pleading that he was current on his mortgage payments,” it would be futile to
allow Mason to amend his complaint to add a quiet title claim. Id. The district
court did not plainly err in denying Mason leave to amend his complaint.
Mason finally argues that the district court erred in denying his motion
for reconsideration. For the reasons discussed above—namely, Mason’s failure
to object to the magistrate judge’s recommendation that his motion for
reconsideration be denied—our review is limited to plain error. See Lawrence,
808 F.3d at 675. We afford district courts “broad discretion” in resolving
motions for reconsideration. Johnson v. Diversicare Afton Oaks, LLC, 597 F.3d
673, 677 (5th Cir. 2010). Mason filed his motion for reconsideration within 28
days of the final judgment, so it is considered a Rule 59(e) motion to alter or
amend the judgment. See Williams v. Thaler, 602 F.3d 291, 303 (5th Cir. 2010).
5 In his motion for reconsideration Mason also referenced “newly discovered
information” that he wished to include in his amended complaint, without further
explanation of the substance of that information. Mason does not mention this newly
discovered information in his briefing on appeal, so we consider this basis for leave to amend
abandoned and do not address it. See Geiger v. Jowers, 404 F.3d 371, 373 n.6 (5th Cir. 2005).
6
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A motion for reconsideration under Rule 59(e) “is not the proper vehicle for
rehashing evidence, legal theories, or arguments that could have been offered
or raised before the entry of judgment.” Templet v. HydroChem, Inc., 367 F.3d
473, 478–79 (5th Cir. 2004). Rather, reconsideration under Rule 59(e) is only
warranted when the proponent shows a need to correct a clear error of law,
present newly discovered evidence, or consider an intervening change in
controlling law. See id; In re Benjamin Moore & Co., 318 F.3d 626, 629 (5th
Cir. 2002). Mason made none of these showings; he offered no new evidence,
failed to demonstrate an intervening change in law, and failed to allege
anything beyond mere disagreement with the magistrate’s findings and
recommendations. Mason’s motion for reconsideration was in large part
“simply a re-write” of his complaint. Schiller v. Physicians Res. Grp. Inc., 342
F.3d 563, 569 (5th Cir. 2003). To the extent that Mason did offer any new
factual assertions or legal arguments, he failed to explain why he could not
have offered them before final judgment was rendered. He did explain that his
failure to timely respond to the motions to dismiss and object to the magistrate
judge’s original recommendations was due to family illnesses; however, these
personal circumstances do not demonstrate why reconsideration is warranted
under the Rule 59(e) framework. The district court did not plainly err in
denying his motion for reconsideration. 6
For the foregoing reasons we AFFIRM the judgment of the district court.
6 Mason’s brief makes passing references to other challenges to the district court’s
judgment such as its “blanket denial of all evidence presented” and its “going beyond the
scope of its jurisdiction to grant the . . . baseless Motion to Dismiss.” However Mason offers
no further discussion or supporting citation for these arguments. So, even construing his
arguments in the liberal manner to which pro se litigants are entitled, we consider these
arguments abandoned. See id.7