Julio Loza v. Select Portfolio Servicing

Case: 19-40687 Document: 00515468579 Page: 1 Date Filed: 06/26/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 19-40687 June 26, 2020
Lyle W. Cayce
JULIO E. LOZA, Clerk
Plaintiff - Appellant
v.
SELECT PORTFOLIO SERVICING, INCORPORATED; DEUTSCHE BANK
NATIONAL TRUST COMPANY, as Trustee for Morgan Stanley ABS Capitol
1 Inc. Trust 2005-HE7, Mortgage Pass-Through Certificates, Series 2005-
HE7; POWER DEFAULT SERVICES, INCORPORATED,
Defendants - Appellees
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 7:17-CV-430
Before SMITH, HIGGINSON, and ENGELHARDT, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:*
Pro se Plaintiff-Appellant Julio E. Loza obtained a loan secured with
residential property in McAllen, Texas. He defaulted and brought the instant
action challenging the resulting foreclosure proceedings. The day before the
deadline for pretrial motions, defendants Deutsche Bank National Trust
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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. 19-40687
Company (“Deutsche Bank”) and Select Portfolio Servicing, Incorporated
(“SPS”) sent Loza new discovery documents. In response, Loza filed a motion
to amend the scheduling order, arguing that he needed time to review the new
documents and possibly request additional discovery before filing a motion for
summary judgment. Deutsche Bank and SPS opposed the motion and filed
their own motion for summary judgment. The district court denied Loza’s
motion, granted Deutsche Bank and SPS’s motion, and sua sponte dismissed
the remaining claims against defendant Power Default Services, Incorporated
(“PDS”) with prejudice for failure to prosecute. Loza filed a timely notice of
appeal. He argues that there was good cause for the district court to grant his
motion to amend the scheduling order, and the district court erred in
dismissing his remaining claims sua sponte. We AFFIRM in part, REVERSE
in part, and REMAND.
I
First, Loza argues that the district court erred in denying his motion to
amend the scheduling order. A scheduling order “may be modified only for good
cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). We review a
district court’s enforcement of its scheduling order for an abuse of discretion.
United States v. Hale, 685 F.3d 522, 532 (5th Cir. 2012). Deutsche Bank and
SPS respond that Loza has waived this argument by failing to adequately brief
it and, alternatively, the district court did not abuse its discretion.
“[W]e liberally construe briefs of pro se litigants and apply less stringent
standards to [them].” Grant v. Cuellar, 59 F.3d 523, 524 (5th Cir. 1995).
However, “pro se parties must still brief the issues and reasonably comply with
the standards of [Fed. R. App. P. 28].” Id. For example, “an appellant [must]
set forth his ‘contentions and the reasons for them, with citations to the
authorities and parts of the record on which the appellant relies.’” Arredondo
v. Univ. of Tex. Med. Branch at Galveston, 950 F.3d 294, 298 (5th Cir. 2020)
2
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(quoting Fed. R. App. P. 28(a)(8)(A)). Nevertheless, “we can consider a pro se
litigant’s non-compliant brief when the non-compliance did not prejudice the
opposing party.” Id. We have found that the opposing party was prejudiced
when it was forced to “speculate as to the relevant issues” when preparing its
own brief, Grant, 59 F.3d at 525, and when the pro se party’s brief was
“confusing and layered with arguments that [were] not supported by the
record,” Arredondo, 950 F.3d at 299. We have found that the opposing party
was not prejudiced when it fully briefed the sole issue in the case, no disputed
facts clouded the resolution of the legal issue, and all that remained was to
apply well-settled law to the facts. Price v. Digital Equip. Corp., 846 F.2d 1026,
1028 (5th Cir. 1988).
Loza’s brief does not contain citations to relevant legal authority, but it
does contain relevant record citations, including citations to the district court’s
order which states the relevant legal standard and cites to relevant legal
authority. Moreover, whether Loza demonstrated good cause is a fact-intensive
issue about which the law is well-settled. Deutsche Bank and SPS adequately
identified this issue and responded to Loza’s arguments in their brief.
Therefore, we discern no prejudice and address this issue on the merits.
We consider four factors in assessing good cause: (1) the explanation for
the failure to comply with the scheduling order, (2) the importance of the
modification, (3) potential prejudice in allowing the modification, and (4) the
availability of a continuance to cure such prejudice. Geiserman v. MacDonald,
893 F.2d 787, 791 (5th Cir. 1990).
Loza argues that he provided a reasonable explanation for his inability
to comply with the existing scheduling order, but he does not challenge the
district court’s finding that the modification was not important. The district
court found that Loza’s claims against Deutsche Bank and SPS all fail as a
matter of law such that no facts Loza could have discovered and no arguments
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Loza could have made in his own motion for summary judgment would have
altered the outcome of the case. A district court does not abuse its discretion
by denying a motion to modify a scheduling order when that modification
would be futile for the moving party. Therefore, we find no abuse of discretion.
II
Loza also argues that the district court should not have dismissed his
remaining claims against PDS with prejudice for failure to prosecute. The
district court has the inherent power to dismiss an action sua sponte for failure
to prosecute. McCullough v. Lynaugh, 835 F.2d 1126, 1127 (5th Cir. 1988). We
review such dismissals for abuse of discretion. Id.
“Dismissals with prejudice for failure to prosecute are proper only where
(1) there is a clear record of delay or contumacious conduct by the plaintiff and
(2) the district court has expressly determined that lesser sanctions would not
prompt diligent prosecution, or the record shows that the district court
employed lesser sanctions that proved to be futile.” Stearman v. Comm’r, 436
F.3d 533, 535 (5th Cir. 2006) (citing Tello v. Comm’r, 410 F.3d 743, 744 (5th
Cir. 2005)); see also Coon v. Charles W. Bliven & Co., Inc., 534 F.2d 44, 48–49
(5th Cir. 1976) (“[D]ismissal of an action for failure to prosecute with
reasonable diligence is . . . too harsh except in extreme circumstances.”
(internal quotation omitted)).
Loza brought this lawsuit on October 2, 2017. On February 7, 2018, he
failed to appear for the initial pretrial and scheduling conference, and the
district court ordered him to state, within ten days, whether he intended to
prosecute his claims. Loza responded by apologizing to the court for missing
the hearing and “reaffirm[ing] his intention to prosecute this case to the best
of his ability.” Thereafter, it does not appear that Loza missed any other
hearings or disobeyed any court orders. Nevertheless, on July 8, 2019, the
district court, in a final paragraph, sua sponte dismissed Loza’s claims against
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PDS. This dismissal was with prejudice. The district court noted that “[t]he
docket does not reflect that [PDS] has been served, or that Plaintiff has made
any attempt to prosecute his suit against it,” but it did not cite to any
contumacious conduct by Loza or expressly consider any lesser sanctions. In
McCullough, the only case cited by the district court in support of its sua sponte
dismissal, we affirmed a dismissal without prejudice for lack of prosecution.
835 F.2d at 1127. Given the paucity of briefing and the circumstances
surrounding the claims against PDS, it is likely that the district court intended
to dismiss without prejudice. However, because the entered dismissal is with
prejudice and the district court did not expressly consider or attempt to employ
any lesser sanctions such as a warning or dismissal without prejudice, we are
compelled to find an abuse of discretion. 1
***
For the foregoing reasons, we AFFIRM the district court’s denial of
Loza’s motion to amend the scheduling order and its summary judgment
dismissal of the claims against Deutsche Bank and SPS, we REVERSE the
district court’s sua sponte dismissal with prejudice of Loza’s remaining claims
against PDS, and we REMAND for further proceedings.
1 Indeed, Federal Rule of Civil Procedure 4(m), which provides the time limit for
service in federal court, says that “[i]f a defendant is not served within 90 days after the
complaint is filed, the court—on motion or on its own after notice to the plaintiff—must
dismiss the action without prejudice against that defendant or order that service be made
within a specified time.” (emphasis added).
5