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Diggs v. Ditech Financial, LLC

United States District Court, W.D. Texas, Austin Division

April 28, 2017





         Before the Court are Defendant's Motion for Summary Judgment (Dkt. No. 18); Plaintiff's Motion for Summary Judgment, In Opposition to Defendant's Summary Judgment (Dkt. No. 19); Defendant's Response (Dkt. No. 20); Plaintiff's Motion for Judgment on the Pleadings (Dkt. No. 21); Defendant's Response (Dkt. No. 24); Plaintiff's Motion for Leave of Court to File His Objection to Defendant's Evidence Attached to Summary Judgment (Dkt. No. 25); Defendant's Response (Dkt. No. 26); and Plaintiff's Motion for Sanctions (Dkt. No. 27). The District Court referred this case to the undersigned for rulings on non-dispositive motions, and for report and recommendation on dispositive motions, pursuant to 28 U.S.C. § 636(b)(1)(A) & (B), Federal Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules.

         I. BACKGROUND

         Plaintiff Varnel L. Diggs, proceeding pro se, brings this action asserting quiet title to remove the lien held by Defendant Ditech Financial, LLC (Ditech). On February 14, 2007, Diggs executed a Home Equity Note with USAA Federal Savings Bank. The Deed of Trust was assigned to GMAC Mortgage, LLC. Since November 2010, Diggs has failed to make his monthly payments on the loan. Thus, on April 18, 2011, the note was accelerated. On February 1, 2013, the Deed of Trust was assigned to Green Tree Servicing, LLC (Green Tree). Then, on June 4, 2013, Green Tree sent a notice of default to Diggs. The notice of default allowed Diggs to cure the default by paying less than the full amount of the loan and provided notice of an intent to accelerate if not paid. Green Tree subsequently changed its name to Ditech. To date, neither Ditech nor its predecessors have moved to foreclose on Diggs's property.

         Diggs originally filed this action in Travis County District Court asserting a quiet title claim against Ditech Financial, LLC (“Ditech”). Dkt. No. 1-1 at 52. Diggs alleged that because Ditech has failed to foreclose on the loan within four years after the acceleration, the lien is invalid. Ditech failed to answer or appear in court, and Diggs moved for default judgment. Id. at 48. A Travis County District Judge granted the default judgment on May 19, 2016. Id. at 61. Upon receiving notice of the default judgment, Ditech moved for a new trial, and, shortly after, removed the action to federal court. This Court granted a new trial, and the parties filed cross motions for summary judgment on Diggs's claim for quiet title.

         II. LEGAL STANDARD[1]

         Summary judgment shall be rendered when the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Washburn v. Harvey, 504 F.3d 505, 508 (5th Cir. 2007). A dispute regarding a material fact is “genuine” if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Washburn, 504 F.3d at 508. Further, a court “may not make credibility determinations or weigh the evidence” in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Anderson, 477 U.S. at 254-55.

         Once the moving party has made an initial showing that there is no evidence to support the nonmoving party's case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. Id. The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Adams v. Travelers Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir. 2006). If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.

         III. ANALYSIS

         Under Texas law, “[a] suit to clear or quiet title- also known as suit to remove cloud from title-relies on the invalidity of the defendant's claim to the property.” Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 388 (Tex. App.-Houston [1st Dist.] 2012, pet. denied). This equitable action “exists to ‘enable the holder of the feeblest equity to remove from his way to legal title any unlawful hindrance having the appearance of better right.'” Hahn v. Love, 321 S.W.3d 517, 521 (Tex. App.-Houston [1st Dist.] 2009, pet. denied) (quoting Thomson v. Locke, 66 Tex. 383, 1 S.W. 112, 115 (1886)). The elements of a quiet-title claim are “(1) an interest in a specific property; (2) title to the property is affected by a claim by the defendant; and (3) the claim, although facially valid, is invalid or unenforceable.” Cruz v. CitiMortgage, Inc., No. 11-cv-2871, 2012 WL 1836095, at *4 (N.D. Tex. May 21, 2012) (citing Sadler v. Duvall, 815 S.W.2d 285, 293 n.2 (Tex. App.-Texarkana 1991, writ denied)).

         A.Four Year Limitations Period

         Diggs contends that the lien is invalid because Ditech failed to bring suit for foreclosure within four years after the note was accelerated. Under Texas law, “[a] person must bring suit for the recovery of real property under a real property lien or the foreclosure of a real property lien not later than four years after the day the cause of action accrues” after which “the real property lien and a power of sale to enforce the real property lien become void.” Tex. Civ. Prac. & Rem. Code Ann. § 16.035(a), (d).[2] A cause of action accrues under Section 16.035 “when the holder actually exercises its option to accelerate.” Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001). However, “a holder can abandon acceleration if the holder continues to accept payments without exacting any remedies available to it upon declared maturity.” Id. at 566-67. Abandonment “has the effect of restoring the contract to its original condition, ” thereby “restoring the note's original maturity date” for purposes of accrual. Khan v. GBAK Props., 371 S.W.3d 347, 353 (Tex. App.-Houston [1st Dist.] 2012, no pet.).

         Neither party disputes that Diggs is in default on the loan, and has been since November 2010. Moreover, the lien was accelerated in April 2011 by notice given pursuant to Texas statutes. Rather, the parties dispute whether the acceleration was abandoned by the subsequent notice of default. Diggs argues first that the notice of default is insufficient to unilaterally abandon the acceleration. Even if sufficient, Diggs contends that he never received the notice of default. ...

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