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Bank of New York Mellon v. Walker

United States District Court, S.D. Texas, Brownsville Division

April 1, 2019

BANK OF NEW YORK MELLON, Plaintiff,
v.
JUDITH L. WALKER AND KEVIN PAUL SEGARS, Defendants.

          MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

          Ignacio Torteya, III United States Magistrate Judge.

         Plaintiff Bank of New York Mellon (“BNYM”) filed its Original Complaint in the above-captioned civil action on February 14, 2019 (hereinafter, BNYM's “Complaint”). Dkt. No. 1. The Complaint (Dkt. No. 1) identifies only two causes of action: one for a declaratory judgment, and the other requesting a court order for permission to proceed with a non-judicial foreclosure. Id. at 5-6. For the reasons provided below, it is recommended that BNYM's Complaint be DISMISSED, and the Clerk of Court be ordered to close this case.

         I. Background[1]

         On or about September 24, 1999, Defendant Judith L. Walker executed a Note bearing a principal amount of $45, 000.00 and a yearly interest rate of 8.625%. Dkt. No. 1-1 at 2. Walker contemporaneously executed a Texas Home Equity Security Instrument (the “Security Instrument”), which granted the lender[2] a security interest in a property bearing the address 426 Winnipeg, Brownsville, Texas 78521 (the “Property”).[3] Although it does not address the chain of assignment(s) or sale(s) of either the Note or Security Instrument, BNYM avers that it “is the current legal owner and holder of the Note . . . and mortgagee of the Security Instrument.” Dkt. No. 1 at 4. The loan servicer, not a party to this lawsuit, is Ocwen Loan Servicing, LLC. See Dkt. No. 1-1 at 21-24. According to BNYM, a default resulted from Defendants' failure “to make payments under the terms of” the Note and Security Instrument. Dkt. No. 1 at 4. BNYM claims that Defendants are delinquent on payments from December 1, 2017 to present. Id. A “Notice of Default” was mailed to an address associated with Walker on February 2, 2018, informing her of the total amount past due and detailing instructions on how to cure the default. Dkt. No. 1-1 at 21-22. On December 27, 2018, a “Notice of Acceleration of Loan Maturity” was mailed to two different addresses associated with Walker, including the address of the Property. Id. at 26-29. BNYM makes no averment regarding whether the Property has been or currently is claimed as a “homestead” by either of the Defendants.

         On February 14, 2019, BNYM filed this action seeking to enforce its security interest in the Property through foreclosure. Dkt. No. 1. BNYM seeks a “judgment . . . declaring that Plaintiff is the owner and holder of the Note, beneficiary of the Security Instrument[, ] and mortgagee, ” along with a judgment “allowing Plaintiff to proceed with non-judicial foreclosure or, in the alternative, judicial foreclosure as to the Property.” Id. at 6-7. In the “Prayer” section of its Complaint, BNYM also demands a judgment “quieting title as to any and all competing interests” and “attorney's fees [and] costs.” Id. at 7. Neither of these final two requests is set out as a separate cause of action.

         Both Defendants were served on February 25, 2019. Dkt. Nos. 5, 6. Pursuant to the Federal Rules of Civil Procedure, each Defendant had until March 18, 2019 to file a responsive pleading. Fed.R.Civ.P. 12(a)(1). As of that date, only Defendant Segars had responded to the lawsuit. See Dkt. No. 7. In his pro se Answer, Segars avers that the loan to Ocwen “was never in [his] name, ” and that he “no longer own[s]” the Property because he “sold it to Alamo Capital Partners, LLC” in January of 2019. Id. at 2.

         II. Legal Standards

         Claims for declaratory judgments in federal court are governed by the Declaratory Judgment Act, which provides, “[i]n a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). The Supreme Court has held that “the phrase ‘case of actual controversy' in the Act refers to the type of ‘Cases' and ‘Controversies' that are justiciable under Article III.” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007).

         To meet the standing requirement under Article III, the party invoking federal jurisdiction must show: (1) it has suffered an “injury-in-fact” that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant(s); and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000); Consol. Cos., Inc. v. Union Pacific R.R. Co., 499 F.3d 382, 385 (5th Cir. 2007); Fla. Dep't of Ins. v. Chase Bank of Tex. Nat'l Ass'n, 274 F.3d 924, 929 (5th Cir. 2001) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560- 61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). “Standing to seek declaratory judgment is subject to these same requirements.” BroadStar Wind Sys. Grp. L.L.C. v. Stephens, 459 Fed.Appx. 351, 356 (5th Cir. 2012) (citing Bennett v. Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997)).

         The general rule is that “standing is to be determined as of the commencement of the suit.” Lujan, 504 U.S. at 571-72. Though a plaintiff may later amend its complaint, post-filing events generally cannot cure a jurisdictional defect that existed at the time the original complaint was filed. Camsoft Data Sys., Inc. v. S. Elec. Supply, Inc., 756 F.3d 327, 337 (5th Cir. 2014); see also Arena v. Graybar Elec. Co., Inc., 669 F.3d 214, 218 (5th Cir. 2012) (“Although 28 U.S.C. § 1653 and [Rule] 15(a) allow amendments to cure defective jurisdictional allegations, these rules do not permit the creation of jurisdiction when none existed at the time the original complaint was filed[.]”).

         III. Analysis

         BNYM seeks the following relief: (1) “a declaration from this Court that it is the owner and holder of the Note and beneficiary of the Security Instrument, ” (2) a “declaration from this Court that . . . BNYM is a mortgagee as that term is defined under Texas Property Code section 51.0001(4), ” (3) a “judgment against Defendants for its reasonable attorney's fees” related to bringing the instant lawsuit, and (4) “a judgment allowing [BNYM] to foreclose on the Property in accordance with the Security Instrument and Texas Property Code section 51.002.” Dkt. No. 1 at 5-6. The Court first turns to the issue of standing to sue, because it is a prerequisite to the maintenance of any lawsuit.

         The Declaratory Judgment Act[4] authorizes federal courts to “declare the rights and other legal relations of any interested party seeking such declaration.” 28 U.S.C. § 2201(a). Such declarations may issue only to resolve an actual controversy between the parties. United Transp. Union v. Foster, 205 F.3d 851, 857 (5th Cir. 2000) (quoting Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-40, 57 S.Ct. 461, 81 L.Ed. 617 (1937)). An actual controversy is a dispute that is “definite and concrete, touching the legal relations of parties having adverse legal interests.” MedImmune, 549 U.S. at 127 (citation and internal quotation marks omitted). The controversy “'must be such that it can presently be litigated and decided and not hypothetical, conjectural, conditional or based upon the possibility of a factual situation that may never develop.'” Rowan Companies, Inc. v. Griffin, 876 F.2d 26, 28 (5th Cir. 1989) (quoting Brown & Root, Inc. v. Big Rock Corp., 383 F.2d 662, 665 (5th Cir. 1967)). BNYM, as plaintiff in this suit, has the burden of establishing the existence of an actual controversy. See Vantage Trailers, Inc. v. Beall Corp., 567 F.3d 745, 748 (5th Cir. 2009); Young v. Vannerson, 612 F.Supp.2d 829, 840 (S.D. Tex. 2009).

         BNYM has failed to carry that burden. The Complaint makes no allegation of a dispute regarding what entity owns or holds the Note or Security Instrument, no allegation of a dispute regarding whether BNYM is a mortgagee, and no allegation of any dispute regarding BNYM's ability to proceed with foreclosure proceedings.[5] While a dispute may arise between the parties in the future, absent any allegations ...


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