United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND ORDER
KEITH P. ELLISON UNITED STATES DISTRICT JUDGE
before the Court is Defendant's Motion to Alter or Amend
Judgment (Doc. No. 38).
February 20, 2018, the Court entered Final Judgment in this
matter (Doc. No. 36). As explained in the Court's
February 8, 2018 Memorandum and Order (Doc. No. 35), the
Court granted summary judgment to Plaintiff Sylvia Zepeda
(“Ms. Zepeda” or “Plaintiff”) on her
claim for quiet title and against Defendant Federal Home Loan
Mortgage Association (“Defendant” or
“FHLMC”) on its counterclaims for equitable and
contractual subrogation. Defendant now moves to alter and/or
amend the Final Judgment pursuant to Federal Rule of
Procedure 59(e) on the ground that the Court's Memorandum
and Order was based upon an error of law that leads to
manifest injustice. For the reasons discussed below, the
Court denies Defendant's Motion.
STANDARD OF REVIEW
to alter or amend a judgment must clearly establish either a
manifest error of law or fact or must present newly
discovered evidence. These motions cannot be used to raise
arguments which could, and should, have been made before the
judgment issued.” Simon v. United States, 891
F.2d 1154, 1159 (5th Cir. 1990) (internal citation omitted).
“A manifest error is an error that is plain and
indisputable, and that amounts to a complete disregard of the
controlling law.” Lyles v. Medtronic Sofamor Danek,
USA, Inc., 871 F.3d 305, 311 (5th Cir. 2017), cert.
denied, 138 S.Ct. 1037 (2018) (citations omitted).
“Reconsideration of a judgment after its entry is an
extraordinary remedy that should be used sparingly.”
Templet v. HydroChem Inc., 367 F.3d 473, 479 (5th
argues that the Court erred in its contractual subrogation
analysis as well as its equitable subrogation analysis. Each
will be taken in turn.
motion cites authority from 1996 suggesting that
“contractual subrogation clauses continue to operate in
the context of a refinance even if the new security
instrument and lien are originated in violation of the Texas
Constitution.” (Doc. No. 38 at 4, citing Benchmark
Bank v. Crowder, 919 S.W.2d 657, 662 (Tex. 1996)). In
Benchmark, the lender became contractually
subrogated to a prior-existing federal tax lien
notwithstanding the fact that the lender's deed of trust
was void because it did not secure one of the three types of
liens that could be secured against homestead property under
the existing law. FHLMC insists that the case establishes
that “[e]ven if the Security Instrument is not
‘foreclosure eligible, ' the remaining clauses in
the contract - including the subrogation clause - remain
intact.” (Id. at 5.) The problem for Defendant
is that the subrogation clause in Plaintiff's Security
Instrument expressly precludes recourse to Ms. Zepeda's
personal liability. (Doc. No. 21, Exhibit #2, ¶ 24.)
(“This means that, absent actual fraud, Lender can
enforce its rights under this Security Instrument solely
against the Property and not personally against the owner of
the Property or the spouse of an owner.”) Because the
Property is not foreclosure-eligible and Ms. Zepeda's
personal liability was, by contract, inaccessible, Defendant
has no available recourse.
also cites Priester v. Long Beach Mortg. Co., No.
4:16-cv-00449, 2018 U.S. Dist. LEXIS 31954, at *18 (E.D. Tex.
Feb. 28, 2018) which again holds that a lender was
contractually subrogated to a prior-existing lien despite
uncured constitutional violations making the security
instrument void. But again in Priester, there is no
discussion of a no-personal-liability provision. Therefore,
it does not alter the Court's analysis.
Motion raises, for the first time, a new legal theory based
on the Security Instrument's severability clause. (Doc.
No. 38 at 6.) “[M]otions [to Amend Judgment] cannot be
used to raise arguments which could, and should, have been
made before the judgment issued.” Simon v. United
States, 891 F.2d 1154, 1159 (5th Cir. 1990) (internal
citation omitted). Accordingly, the Court does not credit
that argument at this time.
has failed to illuminate a manifest error of law or fact or
any newly discovered evidence. Therefore, the Court's
holding with respect to contractual subrogation shall not be