Deutsche Bank National v. Saihat Corp. ( 2021 )

Case: 21-20002 Document: 00516121713 Page: 1 Date Filed: 12/08/2021
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
December 8, 2021
No. 21-20002 Lyle W. Cayce
Clerk
Deutsche Bank National Trust Company, as trustee for
Ameriquest Mortgage Securities Incorporated, Asset-
Backed Pass-Through Certificates, Series 2004-R10,
Plaintiff—Appellee,
versus
Saihat Corporation,
Defendant—Appellant.
Appeal from the United States District Court for the
Southern District of Texas
USDC No. 4:19-CV-825
Before Higginbotham, Stewart, and Wilson, Circuit Judges.
Per Curiam:*
This case is a dispute over competing interests in a foreclosed
property. The district court granted summary judgment to plaintiff Deutsche
Bank National Trust Company (“Deutsche Bank”) after concluding that
*
Pursuant to 5th Circuit Rule 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opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
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No. 21-20002
Deutsche Bank’s lien survived a prior foreclosure as a matter of Texas law
and Deutsche Bank hence was entitled to foreclose against defendant Saihat
Corporation (“Saihat”). We AFFIRM.
I.
Bryan Daniel purchased a property in 1998. Daniel financed his
purchase with a loan and executed a deed of trust and a purchase money deed
of trust in favor of Equity Secured Investments, Inc. The initial loan was paid
off with a home equity loan in 2004 and the associated liens were released.
The home equity loan was secured by a first lien security interest that was
subsequently assigned to its current holder, Deutsche Bank.
The property is located within a homeowners’ association in LaPorte,
Texas. The HOA’s governing document requires homeowners to pay
assessment fees and to reserve a vendor’s lien in favor of the HOA with the
right to enforce through foreclosure. The HOA’s governing document also
states that the HOA’s lien is “secondary, subordinate, and inferior to all
liens, present and future given, granted and created by or at the instance and
request of the Declarant and the Owner of any such lot . . . .” The governing
document requires the HOA provide first mortgage lien holders with sixty
days’ written notice of a foreclosure action.
The Daniels later defaulted on their HOA fees and the HOA filed a
foreclosure action in state court. Deutsche Bank was not a party to the state
court action.1 Saihat bought the property at a constable’s sale following the
foreclosure. Deutsche Bank then sued Saihat and the HOA. Deutsche Bank
argued that its lien was senior to the HOA’s lien and therefore its lien
survived the HOA’s foreclosure sale, making Saihat’s interest junior to
1
See Fairmont Park E. Homeowners Ass’n v. Martha Daniel, No. 201702032 (157th
Dist. Ct. Harris County, Tex. Jan. 1, 2017).
2
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Deutsche Bank’s lien. Deutsche Bank further argued that it is permitted to
foreclose on the property because the Daniels defaulted on their mortgage
and, alternatively, the foreclosure sale to Saihat triggered an acceleration
provision in the mortgage. Deutsche Bank’s claims against the HOA were
dismissed without prejudice following an agreed judgment. Deutsche Bank
then moved for summary judgment against Saihat.
The district court granted summary judgment to Deutsche Bank on
the basis that, regardless of the seniority of the liens, Deutsche Bank’s lien
survived the HOA’s foreclosure. Without ruling as to the seniority of the
liens, the district court held that if Deutsche Bank’s lien was junior, Deutsche
Bank should have been joined to the HOA’s foreclosure action. As Deutsche
Bank was not joined, its lien survived as a matter of Texas law. Alternatively,
the district court held that Texas law requires an HOA to provide notice to
junior liens of any delinquency prior to foreclosure. Thus, the district court
concluded that either Deutsche Bank’s lien survived as the senior lien or it
survived as a junior lien under Texas law due to the HOA’s failure to join or
provide notice to Deutsche Bank. Saihat filed a motion for reconsideration,
which the district court denied. Saihat then timely appealed.
II.
We review de novo a district court’s grant of summary judgment.2
Summary judgment is proper “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.”3 “The moving party is entitled to a judgment as a matter of
law because the nonmoving party has failed to make a sufficient showing on
2
Martin Res. Mgmt. Corp. v. AXIS Ins. Co., 803 F.3d 766, 768 (5th Cir. 2015).
3
Fed. R. Civ. P. 56(a).
3
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an essential element of her case with respect to which she has the burden of
proof.”4
III.
As a threshold matter, Saihat argues that summary judgment was
improper because the district court relied on facts and arguments first raised
in Deutsche Bank’s reply brief in support of its motion for summary
judgment. Deutsche Bank’s motion for summary judgment and Saihat’s
response focused on the seniority of the liens. Deutsche Bank argued in its
reply that its lien alternatively survived due to the HOA’s failure to join or
notify Deutsche Bank to the foreclosure. However, Deutsche Bank had also
stated this argument in its prior amended complaint.
We have previously held that “Rule 56(c) merely requires the court
to give the non-movant an adequate opportunity to respond prior to a
ruling.”5 Here, Saihat was aware of the amended complaint and could have
addressed its claims, knowing that the district court may consider materials
not cited in the motion for summary judgment.6 Further, Saihat was
permitted a sur-reply following Deutsche Bank’s reply which placed the
HOA’s failure to join or give notice directly at issue. Saihat failed to address
this argument in its sur-reply. Therefore Saihat was not prejudiced by
Deutsche Bank’s failure to raise this issue in its initial motion for summary
judgment.7 The district court’s reliance on arguments raised in Deutsche
Bank’s amended complaint and reply was not improper.
4
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks
removed).
5
Jackson v. Widnall, 99 F.3d 710, 713 (5th Cir. 1996).
6
Fed. R. Civ. P. 56(c)(3).
7
Vais Arms, Inc. v. Vais, 383 F.3d 287, 292 (5th Cir. 2004).
4
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IV.
We review whether Deutsche Bank met its burden by identifying the
basis for its motion and portions of the record which demonstrate the absence
of a genuine issue of material fact.8 Deutsche Bank argued that its lien was
senior under the terms of the HOA agreement or that its lien survived due to
the HOA’s failure to join or give notice to Deutsche Bank. As to the first
argument, Deutsche Bank provided the district court with the HOA’s
governing document to establish its seniority. However, the district court did
not rely on this argument, declining to rule on the seniority of the liens.
Instead the district court relied on the HOA’s failure to join or give notice to
Deutsche Bank.
Texas law requires that a senior lienholder join junior lienholders to
foreclosure proceedings; failure to do so results in the junior liens surviving
the foreclosure.9 In its summary judgment order, the district court did not
state what evidence it relied on in determining that the HOA failed to join
Deutsche Bank in the foreclosure. However, the district court stated in its
subsequent order denying Saihat’s motion for reconsideration that it had
relied on the agreed judgment between Deutsche Bank and the HOA from
the outset of litigation. In the agreed judgment, the HOA admitted that
Deutsche Bank’s lien was superior and that the HOA failed to join Deutsche
Bank to the previous foreclosure suit. Deutsche Bank argues that the agreed
judgment amounts to a judicial admission that should withdraw the fact that
8
Celotex, 477 U.S. at 323.
9
Herbert v. Denman, 44 S.W.2d 441, 443 (Tex. Civ. App.—Texarkana 1931);
McDonald v. Miller, 39 S.W. 89, 95–96 (Tex. 1897). See also Costello v. U.S. Bank Tr., N.A.,
No. CV H-16-702, 2016 WL 5871459, at *4 (S.D. Tex. Oct. 7, 2016) aff’d sub nom. Costello
v. U.S. Bank Tr., N.A. for LSF9 Master Participation Tr., 689 F. App’x 253, 256 (5th Cir.
2017) (per curiam).
5
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it was not joined from contention. But because judicial admissions are only
binding against the party that made them, the agreed judgment only bound
the HOA, not Saihat.10
Nonetheless, this Court may take notice of a fact that is not subject to
reasonable dispute and is capable of accurate and ready determination by
resorting to sources whose accuracy cannot be reasonably questioned.11 Upon
examination of the state court records, we take judicial notice of the fact that
Deutsche Bank was not a party to the prior foreclosure action by the HOA
against the Daniels.12 Thus, even if Deutsche Bank’s lien was junior to the
HOA’s lien, it survived as a matter of Texas law.
The district court held, in the alternative, that Deutsche Bank’s lien
would survive because it was not given written notice of the HOA’s
foreclosure proceedings as required by Texas Property Code § 209.0091.
Section 209.0091 establishes prerequisites for a property owners’ association
seeking foreclosure on an assessment lien. These requirements include
providing notice of the delinquency giving rise to the property owners’
association’s foreclosure to any other holder of a lien of record whose lien is
inferior to the property owners’ association’s lien.13
The HOA’s governing document also requires the HOA to give first
lien holders written notice prior to foreclosure, consistent with the
requirements of § 209.0091. Saihat has presented no evidence that the HOA
10
Martinez v. Bally’s Louisiana, Inc., 244 F.3d 474, 476 (5th Cir. 2001).
11
Gov’t of Canal Zone v. Burjan, 596 F.2d 690, 694 (5th Cir. 1979) (citing Fed. R.
Evid. 201).
12
See Fairmont, No. 201702032.
13
Tex. Prop. Code § 209.0091(a)(1).
6
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gave notice to Deutsche Bank.14 Saihat argues that Deutsche Bank has no
proof that it did not receive notice. Saihat asks too much of Deutsche Bank;
on summary judgment, it was Saihat’s burden to prove notice was given.15 As
to Deutsche Bank’s argument that it should have received notice as a matter
of Texas law, it has met its burden as the movant for summary judgment.
Saihat failed to create a genuine issue of material fact as to whether notice
was given to Deutsche Bank.16
Having found that Deutsche Bank’s interest is superior to Saihat’s
interest even if Deutsche Bank’s lien was junior to the HOA’s lien, we need
not reach the issue of seniority.
V.
Saihat also argues that Deutsche Bank had a statutory right of
redemption under Texas Property Code § 209.011 and that Deutsche Bank’s
failure to redeem forfeits its interest in the property. Deutsche Bank responds
that this argument is waived. Saihat cited a statutory right to redeem in a
supplemental response to Deutsche Bank’s motion for summary judgment.
However, Saihat failed to preserve this argument for appeal.
As we have held, if a litigant desires to preserve an argument
for appeal, the litigant must press and not merely intimate the
14
LSR Consulting, LLC v. Wells Fargo Bank, N.A., 835 F.3d 530, 534 (5th Cir.
2016).
15
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
16
Saihat argues that Deutsche Bank was not entitled to notice based upon
Hampshire v. Greeves, 143 S.W. 147 (Tex. 1912). However, Hampshire predates the
legislation which set forth the § 209.0091 notice requirements by nearly a century. 2011
Tex. Sess. Law Serv. Ch. 1282 (H.B. 1228). Further, Hampshire made clear that while a
junior interest holder could not stop a senior interest holder from foreclosing, the rights of
the junior interest holder are in no way affected by the judicial foreclosure to which it was
not a party. Hampshire, 143 S.W. at 150.
7
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argument during the proceedings before the district court. If an
argument is not raised to such a degree that the district court
has an opportunity to rule on it, we will not address it on
appeal.17
At no point in its argument before the district court did Saihat argue
that § 209.011 extinguished Deutsche Bank’s lien. Rather Saihat only recited
portions of the statute and relied on § 209.011 to argue that Deutsche Bank
was not owed notice. Absent an argument from Saihat that § 209.011
extinguished Deutsche Bank’s lien, the district court had no opportunity to
address it and no reason to consider the issue. Additionally, nothing in
§ 209.011 suggests that redemption is compulsory or would lead to a
forfeiture of interest by another lienholder. Courts have repeatedly found
that § 209.011 creates a right to redeem, not an affirmative duty.18 Further, it
is unclear how Deutsche Bank could be expected to redeem without the
notice required by § 209.0091. As Saihat waived its § 209.011 argument, we
need not and do not address it further.
VI.
The district court correctly held that there was no scenario in which
Deutsche Bank did not have a superior interest to that of Saihat. Either
Deutsche Bank’s lien was senior to the HOA lien or Deutsche Bank’s lien
was junior but survived the HOA foreclosure action because the HOA failed
to join or give notice to Deutsche Bank. We AFFIRM.
17
F.D.I.C. v. Mijalis, 15 F.3d 1314, 1327 (5th Cir. 1994).
18
DTND Sierra Invs., LLC v. Wells Fargo Bank, N.A., No. SA-12-CV-662-FB,
2012 WL 12886605, at *4–5 (W.D. Tex. Aug. 13, 2012), DTND Sierra Invs. LLC v.
CitiMortgage, Inc., No. SA-12-CV-80-XR, 2012 WL 1711738, at *7–8 (W.D. Tex. May 15,
2012).
8