Suri Holdings v. Argent Mortgage ( 2021 )

Case: 21-20137 Document: 00516133915 Page: 1 Date Filed: 12/16/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
December 16, 2021
No. 21-20137 Lyle W. Cayce
Clerk
Suri Holdings, L.L.C.,
Plaintiff—Appellant,
versus
Argent Mortgage Company, L.L.C.; Citi Residential
Lending, Incorporated; Nationwide Title Clearing,
Incorporated; Deutsche Bank National Trust Company,
as trustee for Argent Securities Incorporated, Asset-Backed
Pass-Through Certificates, Series 2005-W5; Ocwen Loan
Servicing, L.L.C.; PHH Mortgage Corporation,
Defendants—Appellees.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:19-CV-3844
Before King, Costa, and Willett, Circuit Judges.
Per Curiam:*
*
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opinion should not be published and is not precedent except under the limited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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Suri Holdings sued various defendants in state court, including
Nationwide Title Clearing, Deutsche Bank National Trust Company, and
PHH Mortgage Corporation, 1 asserting various state-law claims to prevent
the foreclosure of a Houston, Texas, property. After removal to federal court,
the district court granted Nationwide Title Clearing’s motion for judgment
on the pleadings and Deutsche Bank National Trust Company and PHH
Mortgage Corporation’s motion for summary judgment. Suri Holdings
appeals, arguing that the district court erred in granting those motions and
abused its discretion in failing to grant discovery continuances. We
AFFIRM the district court’s judgment.
I. Background
A couple purchased a property in Houston, Texas, by executing a
$228,000 promissory note (the “Note”) and security instrument (the
“Deed of Trust”) in favor of a mortgage company. That mortgage company
assigned the Deed of Trust to Deutsche Bank National Trust Company
(“Deutsche Bank”) through a recorded Corporate Assignment of Deed of
Trust (the “Assignment”) and physically transferred the Note to Deutsche
Bank, endorsed in blank (i.e., without a payee specified). PHH Mortgage
Corporation (“PHH”), under an agreement with Deutsche Bank, then
became the servicer of the loan and obtained physical possession of the Note
on Deutsche Bank’s behalf.
Suri Holdings (“Suri”) later acquired the property for $20,000
during a sale conducted by the Harris County Constable’s Office pursuant to
a state-court judgment. Suri filed this lawsuit in state court to enjoin
1
Argent Mortgage Company, L.L.C., and Citi Residential Lending, Inc., were
never served and only appear in the case as the original lender and original mortgage
servicer of the loan at issue. PHH Mortgage Corporation is the successor by merger to
Ocwen Loan Servicing, L.L.C.
2
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No. 21-20137
foreclosure of the property, alleging that the Deed of Trust was
unenforceable because the signature on the Assignment had been forged, and
that Nationwide Title Clearing (“Nationwide”) created that forged
Assignment. Suri alleged causes of action including lack of standing to
foreclose, quiet title, violations of Texas Civil Practice and Remedies Code
§ 12.002 (“Texas Civil Code § 12.002”), negligence per se, and gross
negligence.
Deutsche Bank and PHH removed the case to federal court based on
diversity jurisdiction. The district court rendered a scheduling order that
required discovery to be completed by November 20, 2020, and dispositive-
motion filing by December 15, 2020; the order also scheduled a docket call
for February 1, 2021. In May 2020, Nationwide moved for judgment on the
pleadings and Deutsche Bank and PHH moved for summary judgment.
Suri incorporated a motion for continuance into its responses to
defendants’ motions, requesting 120 days to “continue any ruling” on the
motions. Suri also filed an independent motion to continue. 2 In June 2020,
the district court granted Nationwide a judgment on the pleadings,
concluding that Suri had no viable cause of action against Nationwide
because the pleadings did not establish a case or controversy between the
parties.
Almost eight months later, after no attempt by Suri to supplement the
summary judgment record and after the close of discovery, the district court
granted Deutsche Bank and PHH’s summary judgment motion. Suri appeals
2
Suri’s response to Nationwide’s motion was filed in May 2020, and Suri’s
response to Deutsche Bank and PHH’s motion as well as Suri’s independent motion for
continuance were filed in June 2020.
3
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the district court’s decisions on Nationwide’s motion for judgment on the
pleadings and Suri’s own motions to continue.
II. Standard of Review
We review district court decisions on motions for judgment on the
pleadings under Federal Rule of Civil Procedure 12(c) using the same
standard as motions under Federal Rule of Civil Procedure 12(b)(6), which
are reviewed de novo. Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir. 2004).
Similarly, we review district court decisions for summary judgment de novo
and affirm the district court’s grant of summary judgment on any ground
supported by the record. Smith v. Reg’l Transit Auth., 827 F.3d 412, 417 (5th
Cir. 2016). Denials of Rule 56(d) motions for discovery are reviewed for an
abuse of discretion. Id.III. Discussion
We begin by determining whether the district court properly granted
Nationwide’s motion for judgment on the pleadings. 3 Then, we turn to
3
Suri also appeals the district court’s implicit denial of its motion for continuance,
which requested further discovery in response to Nationwide’s 12(c) motion. The district
court, in the introduction of its order granting Nationwide’s motion, stated that “the
plaintiff’s motion for continuance should be denied.” However, the court did not analyze
the issue or include decretal language on the issue. By ruling on the motion for judgment
on the pleadings, Suri argues that the court implicitly denied Suri’s motion. Specifically,
Suri argues on appeal that the district court cut its discovery with Nationwide short by
ruling on Nationwide’s motion two days before its interrogatory responses were due to
Suri. Discovery responses, however, are irrelevant to 12(c) determinations, which, like
12(b)(6) determinations, are based on the pleadings—not discoverable evidence. “A
motion brought pursuant to [Federal Rule of Civil Procedure] 12(c) is designed to dispose
of cases where the material facts are not in dispute and a judgment on the merits can be
rendered by looking to the substance of the pleadings and any judicially noticed facts.” Hebert
Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76 (5th Cir. 1990) (emphasis added)
(citing 5A Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure § 1367 at 509-10 (1990)).
4
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whether the district court properly granted Deutsche Bank and PHH’s
motion for summary judgment.
A. The District Court’s Judgment on the Pleadings in Favor of
Nationwide
Suri’s petition asserts a claim for a declaratory judgment for lack of
standing to foreclose, a claim to quiet title, and claims for violations of Texas
Civil Code § 12.002, negligence per se, and gross negligence, but Suri appeals
only the district court’s judgment on the pleadings in favor of Nationwide as
to Nationwide’s lack of standing to foreclose and Texas Civil Code § 12.002.
We take each in turn. The district court granted Nationwide a judgment on
the pleadings on ripeness grounds as to both appealed causes of action, 4
which we review de novo. TOTAL Gas & Power N. Am., Inc. v. Fed. Energy
Regul. Comm’n, 859 F.3d 325, 332 (5th Cir. 2017), as revised (July 10, 2017).
1. Nationwide’s Alleged Lack of Standing to Foreclose
The Supreme Court has held “that an appropriate action for
declaratory relief can be a case or controversy under Article III.”
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 126 (2007). To determine
whether a particular action for declaratory relief constitutes a case or
controversy, “the question in each case is whether the facts alleged, under all
the circumstances, show that there is a substantial controversy, between
4
Instead of arguing for the existence of a case or controversy between it and
Nationwide for purposes of the lack-of-standing-to-foreclose cause of action, Suri asks us
to conclude that forgery is a valid cause of action under Texas law for which a declaratory
judgment is warranted in this case. These arguments, as well as the additional assertion of
a forgery cause of action against Nationwide, were not presented to the district court, so
we decline to decide these questions in the first instance. See Montano v. Texas, 867 F.3d
540, 546 (5th Cir. 2017) (“[A] court of appeals sits as a court of review, not of first view.”
(quoting United States v. Vicencio, 647 F. App’x 170, 177 (4th Cir. 2016) (per curiam)
(unpublished))).
5
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parties having adverse legal interests, of sufficient immediacy and reality to
warrant the issuance of a declaratory judgment.” Id. at 127 (quoting Md. Cas.
Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). In a declaratory
judgment action, “[b]ased on the facts alleged, there must be a substantial
and continuing controversy between two adverse parties.” Bauer v. Texas, 341
F.3d 352, 358 (5th Cir. 2003) (emphasis added).
The facts that Suri alleged fall short of demonstrating a substantial
controversy between the parties over interest in the property. None of the
assignment language transferring the property interests from the original
mortgage company to Deutsche Bank names Nationwide. Suri also did not
independently allege that Nationwide was ever a noteholder or lienholder
against the property. In fact, the parties agree that the original petition does
not argue that Nationwide has ever had, or even claimed, an interest in the
property.
Moreover, a claim is not ripe for adjudication “[i]f the purported
injury is ‘contingent [on] future events that may not occur as anticipated, or
indeed may not occur at all.’” Lopez v. City of Houston, 617 F.3d 336, 342 (5th
Cir. 2010) (second alteration in original) (quoting Thomas v. Union Carbide
Agric. Prods. Co., 473 U.S. 568, 580-81 (1985)). Suri anticipates that
Nationwide might, at some point in the future, assert a legal interest in the
property, but Nationwide has not done so to date. Accordingly, there is no
case or controversy between the parties to warrant the consideration, on the
merits, of a declaratory judgment announcing Nationwide’s lack of standing
to foreclose on the property in dispute. So we AFFIRM the district court’s
dismissal of this cause of action.
2. Nationwide’s Alleged Violation of Texas Civil Code § 12.002
Unlike the claim of lack of standing to foreclose, Suri’s claim against
Nationwide for an alleged violation of Texas Civil Code § 12.002 is ripe
6
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because it presents a “controversy between parties having adverse legal
interests, a dispute definite and concrete, not hypothetical or
abstract.” Babbitt v. United Farm Workers Nat’l Union, 442 U.S. 289, 298
(1979) (quoting Ry. Mail Ass’n v. Corsi, 326 U.S. 88, 93 (1945)). The district
court seems to have dismissed this cause of action against Nationwide on the
same ripeness grounds as the declaratory-relief claim. The court reasoned as
follows:
To maintain a suit for declaratory relief a party must plead facts
establishing a “case or controversy” between the parties. Here
the plaintiff fails to state a viable cause of action against the
defendant either by its original suit or its response to the
defendant’s motion for judgment on the pleadings. Equally
cogent reasoning leads the Court to conclude that the
remaining claims and assertions that are based on state statutes
and common law are also foreclosed.
However, the district court presents no further analysis about why the claim
under the “state statute” is not ripe. We are not convinced.
Although the claim of lack of standing to foreclose rests on the
assumption that Nationwide has, or would in the future assert, an interest in
the property, the same cannot be said of the § 12.002 claim because a dispute
under the statute does not require a defendant to assert an interest in
property.
Texas Civil Code § 12.002(a) provides:
A person may not make, present, or use a document or other
record with: (1) knowledge that the document or other record
is . . . a fraudulent lien or claim against real or personal
property or an interest in real or personal property; (2) intent
that the document . . . be given the same legal effect as a court
record . . . evidencing a valid lien or claim against real or
personal property . . . ; and (3) intent to cause another person
to suffer: . . . (B) financial injury.
7
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So rather than being a controversy about who has what property interests,
this cause of action is about the improper “mak[ing], present[ing], or
us[ing]” of a “document or other record.” Id. Suri alleges that Nationwide
“made, presented, or used” the “notices of sale” posted on the
ForecloseHouston.com website, and thereby violated § 12.002—giving rise
to a controversy. Thus, this cause of action is ripe and can be assessed on the
merits.
Suri, however, like the homeowner in Reece v. U.S. Bank Nat’l Ass’n,
762 F.3d 422 (5th Cir. 2014), failed to plead facts sufficient to meet an
element of a claim under § 12.002(a). Specifically, Suri failed to offer facts
demonstrating Nationwide’s “intent to cause [Suri] . . . financial injury.”
§ 12.002(a)(3) (emphasis added). 5 Instead, Suri alleges only that “the
fraudulent business practice of filing a false claim to a superior mortgage
interest in the property” caused “future title-holders like Plaintiff to suffer
financial injury.” But this says nothing about Nationwide’s intent and so fails
to state a claim under § 12.002(a). Thus, Suri’s allegations of intent to cause
injury amount to nothing more than “a formulaic recitation of the [third]
element[] of [this] cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007).
Accordingly, we AFFIRM the district court’s order granting
Nationwide’s motion for judgment on the pleadings.
B. The District Court’s Summary Judgment in Favor of Deutsche Bank
and PHH
Suri appeals the district court’s summary judgment in favor of
Deutsche Bank and PHH on the procedural grounds that the district court
5
We do not decide whether a document assigning a deed of trust constitutes a “lien
or claim” under § 12.002(a).
8
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abused its discretion by implicitly denying its motion for continuance.
Motions brought under Federal Rule of Civil Procedure 56(d) are “broadly
favored” to “safeguard non-moving parties from summary judgment
motions that they cannot adequately oppose.” Am. Fam. Life Assurance Co.
of Columbus v. Biles, 714 F.3d 887, 894 (5th Cir. 2013) (per curiam) (quoting
Culwell v. City of Fort Worth, 468 F.3d 868, 871 (5th Cir. 2006)). 6 Federal
Rule of Civil Procedure 56(d) provides:
If a nonmovant shows by affidavit or declaration that, for
specified reasons, it cannot present facts essential to justify its
opposition, the court may: (1) defer considering the motion or
deny it; (2) allow time to obtain affidavits or declarations or to
take discovery; or (3) issue any other appropriate order.
In June 2020, Suri submitted its motions for continuance, which
requested a 120-day discovery continuance. At that point in the case, Suri
had been conducting discovery for four months 7 and still had five months left
in the discovery period that was agreed on by the parties and approved by the
court. Within this agreed-on discovery period, ending on November 20,
2020, the district court neither granted nor denied the motion. Instead, on
February 8, 2021, 80 days after the discovery period had ended, the district
6
Similar to our court in Culwell, we note that granting Suri’s request for a 120-day
extension would have required altering the deadline for concluding discovery set by the
scheduling order, which the district court has broad discretion to enforce. 468 F.3d at 872(citing Geiserman v. MacDonald, 893 F.2d 787, 790 (5th Cir. 1990)).
7
The parties agreed on February 14, 2020, to a case management plan involving
discovery.
9
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court granted Deutsche Bank and PHH’s summary judgment motion,
remaining silent on Suri’s motion for discovery continuance. 8
Suri argues that this failure to grant its motion for discovery
continuance was an abuse of the district court’s discretion. We disagree. If a
requesting party “has not diligently pursued discovery,” then “she is not
entitled to relief” under Rule 56(d). McKay v. Novartis Pharm. Corp., 751
F.3d 694, 700 (5th Cir. 2014) (quoting Beattie v. Madison Cnty. Sch. Dist., 254
F.3d 595, 606 (5th Cir. 2001)). In its response to Deutsche Bank and PHH’s
motion for summary judgment, submitted on June 16, 2020, Suri notes that
it “sent forgery-related discovery requests to Nationwide” and that
“Nationwide has not responded yet, and will not need to respond until June
25[, 2020].” The district court deferred ruling on the summary judgment
motion until February 2021. Thus, the district court did not abuse its
discretion by deferring consideration of the summary judgment motion until
after discovery closed—237 days after Suri’s motion for discovery
continuance was filed. Accordingly, we AFFIRM the district court’s grant
of Deutsche Bank and PHH’s motion for summary judgment.
IV. Conclusion
For the foregoing reasons, we AFFIRM the district court’s take-
nothing judgment against Suri.
8
The district court’s Memorandum and Order notes that Suri’s response was
“before the Court,” but it does not address the motion for continuance in that response;
nor does the court address Suri’s independent motion for continuance in its order.
10