Georges Benamou v. Wells Fargo Bank N.A.

Case: 17-10353 Document: 00514346653 Page: 1 Date Filed: 02/14/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
No. 17-10353 February 14, 2018
Lyle W. Cayce
Clerk
GEORGES BENAMOU; DOMONIQUE IFERGAN; MICHELLE TUSTES,
Plaintiffs - Appellants
v.
WELLS FARGO BANK NATIONAL ASSOCIATION, as Trustee for
Carrington Mortgage Loan Trust, Series 2007-FRE1, Asset-Backed Pass-
Through Certificates,
Defendant - Appellee
Appeal from the United States District Court
for the Northern District of Texas
No. 3:16-CV-401
Before REAVLEY, SMITH, and OWEN, Circuit Judges.
PER CURIAM:*
In 2006, appellants Georges Benamou, Domonique Ifergan, and Michelle
Tustes refinanced a 2004 home equity loan, paying it off and getting additional
cash besides. The 2006 loan was with Wells Fargo, and though it was itself a
home equity loan, the parties now agree that, under the Texas Constitution, it
did not create a new lien on the Appellants’ property. Under the doctrine of
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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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No. 17-10353
equitable subrogation, however, “a third party who discharges a lien upon the
property of another” may “step into the original lienholder’s shoes and assume
the lienholder’s right to the security interest against the debtor.” LaSalle Bank
Nat. Ass’n v. White, 246 S.W.3d 616, 619 (Tex. 2007) (per curiam). Equitable
subrogation is permissible only if the underlying lien is valid. See id. at 618–
20; Benchmark Bank v. Crowder, 919 S.W.2d 657, 661 (Tex. 1996).
Accordingly, though Wells Fargo cannot enforce any lien arising directly
from the 2006 loan, as the third party who paid off the prior lien against
Appellants’ property, it may yet preserve its lien rights through equitable
subrogation—so long as the 2004 lien was valid. See LaSalle Bank, 246 S.W.3d
at 618–20. Here, application of the doctrine turns on the 2004 lien’s validity,
and that is what this case is about—or, what it would be about if Appellants
had seasonably contended that the 2004 lien was invalid.
Wells Fargo moved for summary judgment on the equitable subrogation
theory, showed that its 2006 loan had paid off the 2004 lien, and provided a
certified copy of the Texas Home Equity Security Instrument establishing that
2004 lien. Appellants opposed summary judgment but did not contend that
Wells Fargo had failed to establish the validity of the 2004 lien. A magistrate
judge undertook the initial review of Wells Fargo’s motion and recommended
that it be granted. Appellants then filed objections with the district court and
abandoned the arguments they had made in favor of the argument they had
not made—to wit, that Wells Fargo failed to establish the 2004 lien’s validity.
The district court found that Appellants waived the validity argument
because they made it only after the magistrate judge had issued her report and
recommendation. Before us, Appellants raise only the validity argument and
fail to address the district court’s waiver finding. That alone would be enough
to dispose of this case. See United States v. Thibodeaux, 211 F.3d 910, 912 (5th
Cir. 2000) (“It has long been the rule in this circuit that any issues not briefed
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No. 17-10353
on appeal are waived.”). In any event, the district court was correct to find the
validity argument waived below. “[A] party who objects to the magistrate
judge’s report waives legal arguments not made in the first instance before the
magistrate judge.” Freeman v. Cty. of Bexar, 142 F.3d 848, 851 (5th Cir. 1998).
Appellants’ argument is that the certified copy of the Texas Home Equity
Security Instrument establishing the 2004 lien is insufficient to establish a
valid lien. This is a legal argument, and it was waived. 1
A district court “may construe an issue raised for the first time in an
objection to a magistrate judge’s report and recommendation as a motion to
amend complaint,” in which case this court “review[s] the district court’s
failure to allow such an amendment for abuse of discretion.” United States v.
Riascos, 76 F.3d 93, 94 (5th Cir. 1996) (per curiam). The district court found
this escape hatch closed to Appellants, rejecting their request to amend the
pleadings. We will not review the correctness of this ruling because Appellants
have failed to argue it was erroneous. With this last finding of waiver, we
conclude our review of this case.
The judgment is AFFIRMED.
1If not for these waivers, we would have found another. Appellants did not adequately
brief the validity argument. See FED. R. APP. P. 28(a)(8). This case raises interesting
questions. When Texas law supplies the rule of decision, what must a lender do at the
summary judgment stage to establish a valid lien for purposes of the equitable-subrogation
analysis? Does a prima facie showing suffice, or must the defendant also prove that the
underlying loan transaction complied with the Texas Constitution in all respects?
Appellants’ argument, such as it is, consists of two paragraphs with no citations to legal
authority, one citation to the magistrate judge’s report and recommendation, and no
discussion of these vital questions. This is insufficient. See, e.g., Ambraco, Inc. v. Bossclip
B.V., 570 F.3d 233, 241 n.6 (5th Cir. 2009). To rule in Appellants’ favor would require a
thorough examination of Texas law and its fit within the federal rules governing summary
judgment. On this briefing, it would be judicially irresponsible to reach the merits.
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