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Pittman v. Seterus Inc.

United States District Court, N.D. Texas, Dallas Division

May 10, 2019

CRAIG PITTMAN, Individually, KELLY KONACK PITTMAN, Individually Plaintiffs,
v.
SETERUS, INC., Defendant.

          FINDINGS, CONCLUSIONS, AND RECOMMENDATION

          IRMA CARRILLO RAMIREZ UNITED STATES MAGISTRATE JUDGE [1]

         Before the Court are Defendants' Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6), filed December 3, 2018 (doc. 9), and Plaintiffs' Motion for Leave to File Sur-Reply to Defendant's Reply to Plaintiffs' Response in Opposition to Defendant's Motion to Dismiss, filed February 7, 2019 (doc. 24). By Order filed April 24, 2019 (doc. 29), also before the Court is Plaintiffs' Emergency Ex Parte Application for Temporary Restraining Order, Preliminary Injunction and Order to Show Cause, filed April 24, 2019 (doc. 28). Based on the relevant filings and applicable law, the motion to dismiss should be GRANTED, and the application for a temporary restraining order and preliminary injunction should be DENIED, and the motion for leave to file a surreply is DENIED.

         I. BACKGROUND

         This removed case involves the attempted foreclosure of real property located at 9310 Mill Hollow Drive, Dallas, Texas 75243 (the Property). (doc. 1-1 at 11.)[2] On December 1, 2005, Craig Pittman and Kelly Konack Pittman (Plaintiffs) executed a Texas Home Equity Adjustable Rate Note (the Note) secured by a Texas Home Equity Security Instrument (Deed of Trust) (collectively, the Loan Agreement) in favor of First Magnus Financial Company (FMFC) encumbering the Property for the original principal amount of $220, 000.00. (Id. at 16-18, 32-46, 49, 59-62.) Federal National Mortgage Associate (Fannie Mae) is the current mortgagee of the Loan Agreement, and Seterus, Inc. (Defendant) is the mortgage servicer. (Id. at 16, 32, 49-51, 59.) Under the terms of the Loan Agreement, Plaintiff would be in default if they failed to timely pay the full amount of each required monthly payment and subject to acceleration of the loan and foreclosure proceedings. (Id. at 34, 43-44, 60-61.) They failed to make their payments under the Loan Agreement, and the debt was accelerated on October 17, 2013. (Id. at 16, 55-56.)

         A. First Lawsuit

         On October 3, 2014, Plaintiffs filed a pro se petition in state court against Defendant, FMFC, Fannie Mae, and others, seeking to prevent the scheduled foreclosure sale of the Property. (doc. 1-1 at 99-100); see also Craig Pittman and Kelly Konack Pittman v. Seterus, Inc., et al., Civil Action No. 3:14-CV-3852-M (BF) (N.D. Tex.) (First Lawsuit). The lawsuit was subsequently removed to federal court on October 29, 2014. (Id. at 100.) Fannie Mae then filed a counterclaim seeking a judgment allowing it to foreclose on the Property due to Plaintiffs' failure to make their payments under the terms of the Loan Agreement. (Id. at 99-103.) On June 15, 2015, the defendants moved for summary judgment “as to all of the [Plaintiffs'] claims and causes of action.” Pittman v. Seterus, Inc., No. 3:14-CV-3852-M (BF), 2015 WL 7444108, at *1 (N.D. Tex. Oct. 28, 2015), adopted by, 2015 WL 7424766 (N.D. Tex. Nov. 23, 2015). The motion was granted as to all of Plaintiffs' claims. Id. at *6; see Pittman v. Seterus, Inc., No. 3:14-CV-3852-M (BF), 2015 WL 7424766, at *1 (N.D. Tex. Nov. 23, 2015). Fannie Mae subsequently “moved to amend the Judgment entered by the District Court to include its counter-claim as part of an amended final judgment.” Pittman v. Seterus, Inc., No. 3:14-CV-3852-M (BF), 2016 WL 4791926, at *1 (N.D. Tex. Jan. 8, 2016). On January 19, 2016, an amended judgment was entered that specifically addressed the counterclaim and permitted the Loan Agreement to be enforced “through non-judicial foreclosure of the Property . . . .” (doc. 1-1 at 93-95.)

         B. Current Lawsuit

         On October 16, 2018, Defendant sent Plaintiffs a Notice of Posting and Sale and a Notice of Foreclosure; the foreclosure sale scheduled to take place on November 6, 2018. (Id. at 16, 49-51.) Plaintiffs filed their pro se petition and application for a temporary restraining order and injunctive relief in the 192nd District Court of Dallas County on November 2, 2018, to stop the scheduled foreclosure sale. (doc. 1-1 at 10-24.) The state court initially granted Plaintiffs' request for a temporary restraining order following a hearing, but later vacated that order and denied the request on November 8, 2018. (doc 1-1 at 78, 125.) On November 19, 2018, Defendant removed this action, asserting diversity jurisdiction under 28 U.S.C. § 1332. (doc. 1 at 1-4.)

         Plaintiffs seek to quiet title “and forever remove a cloud on the [P]roperty” on grounds that they hold superior title to the Property, and that the Deed of Trust on the subject property is void because the statute of limitations to foreclose on the Property ran on November 11, 2017- four years and twenty-five days after the initial acceleration date of October 17, 2013. (doc 1-1 at 12-14, 16-17.) They assert claims for limitation of actions under Tex. Civ. Prac. & Rem Code § 16.035 and to quiet title, and seek declaratory and injunctive relief. (Id. at 17-25.)

         On December 3, 2018, Defendant moved to dismiss Plaintiffs' claims for failure to state a claim. (docs. 9-11.) Plaintiffs filed their response on January 3, 2019, and Defendant filed its reply on January 31, 2019. (docs. 19; 23.) On February 7, 2019, Plaintiffs filed an opposed motion to file a surreply to address what they allege were new arguments raised by Defendant in its reply. (See docs. 24-25.) On April 24, 2019, Plaintiffs filed an emergency application for a temporary restraining order and preliminary injunction to prevent the foreclosure sale of the Property, which was rescheduled for May 7, 2019, until this was resolved, Defendant responded on May 1, 2019, and Plaintiffs replied on May 2, 2019. (docs. 28; 31-34.)[3] On May 8, 2019, Defendant filed a notice with the Court, notifying it that the foreclosure sale of the Property was completed on May 7, 2019. (doc. 40.) The motions are now ripe for recommendation.

         II. MOTION FOR LEAVE TO FILE SURREPLY

         Plaintiffs request leave to file a surreply to address alleged new arguments in Defendant's reply brief. (doc. 24 at 1-2.)

         The purpose of filing a reply “is to give the movant the final opportunity to be heard, and to rebut the nonmovants' response, thereby persuading the court that the movant is entitled to the relief requested by the motion.” Info-Power Int'l, Inc. v. Coldwater Tech., Inc., No. 3:07-CV-0937-P, 2008 WL 5552245, at *8 (N.D. Tex. Dec. 31, 2008) (citation and internal quotation marks omitted). Accordingly, “a court generally will not consider arguments raised for the first time in a reply brief.” Pennsylvania Gen. Ins. Co. v. Story, No. 3:03-CV-0330-G, 2003 WL 21435511, at *1 (N.D. Tex. June 10, 2003) (citations omitted). An exception may be made, however, and leave to file a surreply may be granted to allow the “nonmovants . . . a chance to respond” to the movant's newly-asserted theories or evidence. See id. Leave to file a surreply is unwarranted, however, where the proposed surreply merely restates the arguments made in the party's initial response. See, e.g., Williams v. Aviall Serv. Inc., 76 Fed.Appx. 534, 535 (5th Cir. 2003) (affirming the denial of a party's motion for leave to file a surreply because the surreply did not include new arguments or evidence); Berkman v. City of Keene, No. 3:10-CV-2378-B, 2011 WL 3268214, at *5 (N.D. Tex. July 29, 2011) (denying a party's motion for leave to file a surreply because the proposed surreply involved no new issues).

         Here, Defendant's alleged “mischaracterization of Plaintiffs' arguments . . . and new arguments” do not create new issues or amount to new evidence. See Branton v. City of Dallas, No. 3:97-CV-0245-P, 1999 WL 765646 (N.D. Tex. Sept. 23, 1999) (denying motion for leave to file a sur-reply correcting inaccuracies in the reply, finding “that no justification for the filing of materials outside the normal course of briefing has been shown.”), rev'd on other grounds, Branton v. City of Dallas, 272 F.3d 730 (5th Cir. 2001). Moreover, to the extent Plaintiffs complain that Defendant raised new arguments by introducing new rules or mischaracterizing their arguments, it was unnecessary to reach those alleged new arguments. Any surreply to address them is unnecessary. Plaintiffs' motion for leave to file a surreply is DENIED.

         III. RULE 12(b)(6) MOTION

         Defendant moves to dismiss all of Plaintiffs' claims under Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim. (docs. 9 at 1; 10 at 1.)

         A. Le ...


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