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Greenway v. Mortgage Research Center, LLC

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

April 30, 2019



          Lee H. Rosenthal Chief United States District Judge.

         Frank B. Greenway and Marie G. Greenway, representing themselves, sued Mortgage Research Center, LLC; the Government National Mortgage Association; Wells Fargo Bank; Robert Wilkie, the Secretary of the United States Department of Veterans Affairs; The Money Source, Inc.; and Mortgage Electronic Registration Systems, Inc. (collectively, the “Lenders”). The Greenways challenge the nonjudicial foreclosure sale of their home, which occurred in May 2018. They seek a declaration that the Lenders lack standing to foreclose, based on claims that include wrongful foreclosure, fraudulent inducement, breach of contract, void contract, breach of fiduciary duty, and quiet title. The Lenders have moved for summary judgment, submitting documents relating to the mortgage, default, and foreclosure. The Greenways have not responded or requested more time to do so, though their response deadline has long past.

         After a careful review of the motion, record evidence, and applicable law, the court grants summary judgment for the Lenders. Final judgment is separately entered. The reasons are explained in detail below.

         I. The Background

         In September 2015, the Greenways obtained a $155, 778 home mortgage loan from the Mortgage Research Center to purchase a home in Bryan, Texas. (Docket Entry No. 21 at 7). The United States Department of Veteran's Affairs guaranteed the loan. (Id. at 22-23). When a home purchaser obtains a home-mortgage loan, the purchaser ordinarily signs a promissory note, agreeing to repay the loan amount to the lender, and a deed of trust, giving the lender certain rights in the home, including to sell the home if the purchaser fails to make loan payments.

         The Greenways' Promissory Note required them to make $732.53 payments on the first day of each month for 30 years. (Id. at 7). The Note stated that the Greenways would default if they did not pay “the full amount of each monthly payment” when due. (Id. at 8). A default meant that the Lenders could send the Greenways notice that they had to make the missed payment within 30 days, or their entire loan balance would become immediately due. (Id.).

         The Greenways' Deed of Trust required them to make timely payments under the Note. (Id. at 13). If the Greenways missed payments and did not repay them, even after receiving notice and time to do so, the Deed permitted the Lenders to demand “immediate payment” of the full loan balance. (Id. at 18-20). The Lenders had the right to sell the Greenways' home if they failed to pay the loan balance, after providing an opportunity to reinstate the loan and giving proper notice of the sale. (Id.). The Deed named the Mortgage Electronic Registration Systems, known as MERS, as the beneficiary. (Id. at 12).

         The Greenways failed to make their loan payments for July and August 2017. (Id. at 4). In September 2017, The Money Source, the loan servicer, sent the Greenways written notice that they were in default and owed $3, 149.44, giving them 35 days to cure the default. (Id. at 4, 26).

         The notice reminded the Greenways that failing to cure the default by the deadline could result in the full loan balance becoming due and the sale of their home. (Id. at 27).

         The Greenways did not pay any amount to cure the default. (Id. at 4). In December 2017, MERS assigned the Deed to The Money Source. (Id. at 29). The assignment was recorded in the Official Public Records of Brazos County, Texas. (Id.). The Money Source then appointed substitute trustees to sell the Greenways' home. (Id. at 32, 34). In March 2018, the substitute trustees sent the Greenways written notice that a nonjudicial foreclosure sale was scheduled for May 1, 2018. (Id. at 36).

         At the foreclosure sale, The Money Source purchased the Greenways' property for $162, 684.39. (Id. 39-40). The substitute trustees issued a substitute-trustee deed to The Money Source on May 7. (Id.). The substitute-trustee deed was recorded in the Brazos County Official Public Records. (Id. at 45).

         As the loan guarantor, the Department of Veterans Affairs was the successor in interest to The Money Source. (Docket Entry No. 3-2 at 15); see 38 C.F.R. §§ 36.4323-36.4324. In June 2018, the Department sought a judgment of possession from the Brazos County Justice of the Peace. (Id.). In July 2018, the Justice of the Peace entered a judgment of possession for the Department after the Greenways failed to appear. (Id. at 8). The Greenways appealed the judgment to the County Court of Brazos County. (Id. at 9). In August, the Brazos County Court entered a final judgment of possession for the Department, with “such writs and processes as may be necessary in the enforcement and collection of this judgment.” (Docket Entry No. 3-5).

         In August, after the final judgment of possession was issued, the Greenways sued in Brazos County District Court, seeking a temporary restraining order and a preliminary injunction against the foreclosure sale (which had already happened), transfer of ownership, and eviction. (Docket Entry No. 1-1 at 12-43). They also sought a declaratory judgment that the Lenders had lacked authority to foreclose.

         The Department removed, opposed the requested relief, and moved to dismiss. (Docket Entry Nos. 1, 3). The court denied the request for a temporary restraining order or preliminary injunction, finding an insufficient basis for a likelihood of success on the merits and the court granted the Department's motion to dismiss. (Docket Entry No. 5 at 4-8).

         The Lenders then moved for judgment on the pleadings, and the Greenways moved for leave to file a supplemental complaint and to compel the Lenders to produce certain documents. (Docket Entry Nos. 15-17). The court converted the Lenders' motion into one for summary judgment, directed the Lenders to submit certain documents with the motion for summary judgment, and denied the Greenways' motion to compel. (Docket Entry No. 19). The court gave the Lenders until March 1, 2019, to file a supplemental brief and the additional documents. (Id. at 3). The Greenways were to respond to the summary-judgment motion no later than March 22.

         The Lenders moved for summary judgment, arguing that the undisputed record evidence shows that the Greenways defaulted; received proper notice of the default and received proper notice of the foreclosure sale; did not cure; the Greenways lacked standing to challenge MERS's assignment to The Money Source; The Money Source had standing to foreclose; the Greenways had no property interest to support their quiet-title claim; the Note and Deed were neither unconscionable nor a breach of the Note or Deed; no misrepresentations were made to the Greenways as to the loan, default, assignment, or foreclosure sale; and the Greenways were not owed fiduciary duties. (Docket Entry No. 20 at 10-20). The Lenders submitted a number of documents, including the Note; Deed; default notice; assignment; substitute-trustee appointment; foreclosure-sale notice; substitute-trustee deed; affidavit confirming notice of foreclosure sale; and state-court documents. (Docket Entry Nos. 3-1-3-5; 21). The Greenways have not responded or requested more time to do so.

         The Lenders' arguments and submissions are considered in detail below.

         II. The Legal Standard

         “Summary judgment is appropriate only if there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Vann v. City of Southaven, Miss., 884 F.3d 307, 309 (5th Cir. 2018) (quotation omitted); see also Fed. R. Civ. P. 56(a). “A genuine dispute of material fact exists when the ‘evidence is such that a reasonable jury could return a verdict for the nonmoving party.'” Burrell v. Prudential Ins. Co. of Am., 820 F.3d 132, 136 (5th Cir. 2016) (quoting Savant v. APM Terminals, 776 F.3d 285, 288 (5th Cir. 2014)). The moving party “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of” the record “which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         “Where the non-movant bears the burden of proof at trial, ‘the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating'” that “there is an issue of material fact warranting trial.” Kim v. Hospira, Inc., 709 Fed.Appx. 287, 288 (5th Cir. 2018) (quoting Nola Spice Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015)). While the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant's case. Austin v. Kroger Tex., L.P., 864 F.3d 326, 335 (5th Cir. 2017). A fact is material if “its resolution could affect the outcome of the action.” Aly v. City of Lake Jackson, 605 Fed.Appx. 260, 262 (5th Cir. 2015) (citing Burrell v. Dr. Pepper/Seven UP Bottling Grp., Inc., 482 F.3d 408, 411 (5th Cir. 2007)). “If the moving party fails to meet [its] initial burden, [the summary-judgment motion] must be denied, regardless of the nonmovant's response.” Pioneer Expl., LLC v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014) (quoting Kee v. City of Rowlett, Tex., 247 F.3d 206, 210 (5th Cir. 2001)).

         “When the moving party has met its Rule 56(c) burden, the nonmoving party cannot survive a summary judgment motion by resting on the mere allegations of its pleadings.” Duffie v. United States, 600 F.3d 362, 371 (5th Cir. 2010). The nonmovant must identify specific evidence in the record and articulate how that evidence supports that party's claim. Willis v. Cleco Corp., 749 F.3d 314, 317 (5th Cir. 2014). “This burden will not be satisfied by ‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.'” Jurach v. Safety Vision, LLC, 642 Fed.Appx. 313, 317 (5th Cir. 2016) (quoting Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005)). In ...

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