United States District Court, E.D. Texas, Sherman Division
JOHN C. KING, Plaintiff,
SELECT PORTFOLIO SERVICING, INC., and U.S. BANK, N.A., SUCCESSOR TRUSTEE TO BANK OF AMERICA, N.A., AS SUCCESSOR TRUSTEE TO LASALLE BANK, N.A., AS TRUSTEE FOR THE HOLDERS OF THE MERRILL LYNCH FIRST FRANKLIN MORTGAGE LOAN TRUST, MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES 2006-FF18, Defendants.
MEMORANDUM OPINION AND ORDER
KIMBERLY C. PRIEST JOHNSON UNITED STATES MAGISTRATE JUDGE.
before the Court is Defendants Select Portfolio Servicing,
Inc. (“SPS”) and U.S. Bank, National Association,
Successor Trustee to Bank of America, N.A., as Successor
Trustee to LaSalle Bank, N.A., as Trustee for the Holders of
the Merrill Lynch First Franklin Mortgage Loan Trust,
Mortgage Loan Asset-Backed Certificates, Series
2006-FF18's (“Trustee Bank”) (collectively,
“Defendants”) Motion for Summary Judgment (the
“Motion”) (Dkt. 62). After review of the Motion
and associated briefing (see Dkts. 75, 79, 80, 81,
82), the Court finds the Motion (Dkt. 62) is
GRANTED and Plaintiff John C. King's
(“Plaintiff”) claim is DISMISSED WITH
John C. King is the current owner of real property located at
11898 Eastpark Lane, Frisco, Texas 75033 (the
“Property”). See Dkts. 60 at ¶ 6;
62 at 6. According to Plaintiff's Fourth Amended
Complaint, Defendants or their predecessors filed a valid
Deed of Trust (“Deed of Trust”) encumbering the
Property on October 31, 2006, in Denton County, Texas.
See Dkt. 60 at ¶ 8. Identical copies of the
Deed of Trust, dated October 18, 2006, were submitted to the
Court by Plaintiff and Defendants. See Dkts. 75-2;
34-1 at 13-33; and 62-2. The Deed of Trust served as security
for a Promissory Note (the “Promissory Note”),
which was also dated October 18, 2006, and executed by
Plaintiff's then-wife, Genevieve King (“Ms.
King”), for the original principal amount of $192,
700.00 (the Deed of Trust and Promissory Note are
collectively referred to as the “Loan”).
See Dkt. 34-1 at 6-11. Plaintiff admits in his
Fourth Amended Complaint that he has not made any payments
towards the balance due on the Promissory Note since April 1,
2008. See Dkt. 60 at ¶ 16; see also
Dkt. 62 at 7. Regardless of this fact, Plaintiff seeks a
declaratory judgment granting him quiet title to the
Property. See Dkt. 60 at ¶ 15. Plaintiff
alleges that any lien Defendants had on the Property is now
void due to inaction past the statute of limitations period
after a notice of acceleration and foreclosure. Id.
at ¶ 16.
claim centers on the timeline of several notices sent to him
and/or Ms. King by Defendants and/or their predecessors.
First, Plaintiff alleges (and Defendant accepts (see
Dkt. 62 at 11)) that on November 10, 2008 (subsequent to
Plaintiff's default on the Loan in April 2008), Balcom
Law Firm, P.C., which had been retained by Defendants'
predecessor mortgage servicer, sent a Notice of Acceleration
and Notice of Foreclosure (the “November 2008
Acceleration Notice”), accelerating the debt owed under
the Promissory Note, and notifying Plaintiff that foreclosure
sale of the Property would occur if the debt owed was not
paid in full. See Dkt. 75-6. The November 2008
Acceleration Notice informed Plaintiff that the debt owed was
$191, 284.92, plus interest accruing from the date of
default, late charges, expenses of collection, and Balcom Law
Firm, P.C.'s attorneys' fees. See id. at
2-3. Next, Plaintiff stipulates that Ms. King received a
letter late in December 2010 (the “December 2010
Notice”), which stated that if the Loan's default
was “not cured on or before January 5, 2011, the
mortgage payments [would] be accelerated.” See
Dkts. 62-5 at 4; 75 at 11. Lastly, the most recent undisputed
notice came on October 8, 2014, when Barrett Daffin Frappier
Turner & Engel, LLP, on behalf of Defendant SPS, sent a
“Rescission of Acceleration of Loan Maturity”
(the “October 2014 Notice”) to Plaintiff.
See Dkts. 62 at 12; 62-13; 62-14; and 75 at 13.
this series of notices, and after filing the present lawsuit
(the “Lawsuit”), on November 3, 2015, Plaintiff
filed for bankruptcy in the Eastern District of Texas.
See Dkt. 62-15. Although Plaintiff filed the Lawsuit
on October 26, 2015, he did not include his claim against
Defendants in the bankruptcy schedules, wherein Plaintiff was
asked to list his assets, including potential “[c]laims
against third parties, whether or not [Plaintiff had] filed a
lawsuit or made a demand for payment.” Dkt. 62-16 at10.
Accordingly, the Lawsuit (and resulting potential quiet title
to the Property) was not included in Plaintiff's
Bankruptcy Estate (the “Bankruptcy Estate”).
Instead, Plaintiff included the Lawsuit in his Statement of
Financial Affairs. See Dkt. 62-18 at 40. The
Bankruptcy Court ultimately issued an Order of Discharge on
February 10, 2016. See Dkt. 62-17.
Rule 56(c) of the Federal Rules of Civil Procedure, summary
judgment is proper “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with affidavits, if any, show that there is no genuine issue
as to any material fact and that the moving party is entitled
to a judgment as a matter of law.” Rule 56(c) mandates
the entry of summary judgment, after adequate time for
discovery and upon motion, against a party who fails to make
a showing sufficient to establish the existence of an element
essential to that party's case, and on which that party
will bear the burden of proof at trial. See Fed. R.
Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S.
317, 322 (1986).
mere existence of some alleged factual dispute between the
parties will not defeat summary judgment; the requirement is
that there be no genuine issue of material fact. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48
(1986). A fact is “material” if a dispute over it
might affect the outcome of a suit under governing law;
factual disputes that are “irrelevant or
unnecessary” do not affect the summary judgment
determination. See Id. at 248. An issue is
“genuine” if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party. See id.
STANDING TO PURSUE CLAIM CONNECTED TO BANKRUPTCY
Section 541 of the Bankruptcy Code, a debtor's bankruptcy
estate includes “all legal or equitable interests of
the debtor in property as of the commencement of the
case.” 11 U.S.C. § 541(a)(1); see also Kane v.
Nat'l Union Fire Ins. Co., 535 F.3d 380, 385 (5th
Cir. 2008) (stating that “all of a debtor's assets,
including causes of action belonging to the debtor at the
commencement of the bankruptcy case, vest in the bankruptcy
estate upon the filing of a bankruptcy petition.”).
“Thus, a trustee, as the representative of the
bankruptcy estate, is the real party in interest, and is the
only party with standing to prosecute causes of action
belonging to the estate once the bankruptcy petition has been
filed.” Kane, 535 F.3d at 385 (citing 11
U.S.C. §§ 323, 541(a)(1); Wieburg v. GTE Sw.
Inc., 272 F.3d 302, 306 (5th Cir. 2001). However, after
notice and hearing, a trustee may abandon any property of the
estate if it is “of inconsequential value and benefit
to the estate.” 11 U.S.C. § 554(a).
JUDICIAL ESTOPPEL CONNECTED TO BANKRUPTCY PETITION
estoppel is a common law doctrine preventing parties from
assuming advantageous, inconsistent positions in litigation.
See In re Superior Crewboats, Inc., 374 F.3d 330,
334 (5th Cir. 2004). “Generally, judicial estoppel is
invoked where ‘intentional self-contradiction is being
used as a means of obtaining unfair advantage in a forum
provided for suitors seeking justice.'”
Id. at 334-35 (quoting Scarano v. Cent. R.R.
Co., 203 F.2d 510, 513 (3d Cir. 1953)). The Fifth
Circuit has recognized three factors when deciding whether to
invoke judicial estoppel: whether (1) a party's position
is clearly inconsistent with its previous one; (2) a court
accepted the previous position; and (3) inconsistency was
“inadvertent.” Id. at 335. In ...