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Wells Fargo Bank, N.A. v. Pantalion

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

June 20, 2019

WELLS FARGO BANK, N.A., Plaintiff,



         Wells Fargo Bank, N.A. sued Rhonda J. Pantalion, alleging that Pantalion defaulted on her home-mortgage loan and that it is entitled to foreclose. Pantalion was properly served but did not appear, answer, assert a defense, or give any indication that she intended to do so. Wells Fargo has moved for default judgment and attorney's fees, arguing that the complaint states a plausible claim and that both Texas law and the home-mortgage loan authorize attorney's fees for a foreclosure action. (Docket Entry Nos. 8, 17-18). The court enters default judgment and awards Wells Fargo attorney's fees against the property after a foreclosure sale. Final judgment is separately entered. The reasons are explained in detail below.

         I. Background

         In 2004, Pantalion obtained a $104, 250 home-mortgage loan from Olympus Mortgage Company to purchase a home in Katy, Texas. (Docket Entry No. 1 at 4). Pantalion signed a Promissory Note, agreeing to repay the loan amount in monthly payments of $768.59, and a Security Agreement that gave Olympus a security interest in the home. (Id.). The Note and Security Agreement were recorded in the Harris County Public Records. (Id.).

         The Note stated that if Pantalion “did not pay the full amount of each monthly payment on the date it is due, [she] will be in default.” (Id. at 4). If Pantalion defaulted, Wells Fargo could inform Pantalion in writing that if she did not pay the amount due within 30 days, her loan would be accelerated, requiring her to immediately pay the full loan balance. (Id. at 4, 20). The Note and Security Agreement required all notices to be in writing and sent by first class mail. (Id. at 4, 17). To foreclose on Pantalion's home, Wells Fargo requires a court order. (Id. at 20).

         Olympus negotiated and endorsed the Note to Ameriquest Mortgage Company, without recourse. (Docket Entry No. 18-1 at 35); see First Nat'l Acceptance Co. v. Dixon, 154 S.W.3d 218, 222 (Tex. App.-Beaumont 2004, no pet.) (“Negotiation is transfer of possession of an instrument by a person other than the issuer to a person who thereby becomes its holder.”). In August 2004, Ameriquest assigned the Note to “WELLS FARGO BANK NATIONAL ASSOCIATION AS TRUSTEE.” (Docket Entry No. 18-1 at 37-38). The assignment was recorded in the Harris County Public Records. (Id.). Then, in February 2008, Wells Fargo Bank National Association as Trustee assigned the Note to “WELLS FARGO BANK, N.A. AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED AS OF OCTOBER 1, 2004 ASSET-BACKED PASS-THROUGH CERTIFICAES SERIES 2004-MHQ1.” (Id. at 40- 42). This assignment, too, was recorded in the Harris County Public Records. (Id.).

         Pantalion did not pay her mortgage on May 1, 2018, as required by the Note, and has not made a payment since. (Id. at 4). In July 2018, Ocwen Loan Servicing, LLC, the loan servicer for Wells Fargo, sent Pantalion a Notice of Default by certified mail, informing her that she was in default and owed $2, 954.97. (Docket Entry No. 1-1 at 30-31). The Notice stated that Pantalion had until August 12, 2018, to cure the default, and that a failure to cure would lead to the loan's acceleration and, if she could not pay the loan's full balance, a foreclosure sale. (Id.). The Notice stated that after acceleration, but before foreclosure, Pantalion could attempt to reinstate the loan, “depending on the terms of the note and mortgage, any payments received and/or any relevant prior court order.” (Id. at 31).

         Pantalion did not cure the default. In September 2018, a law firm sent Pantalion a Notice of Acceleration by certified mail, stating that Wells Fargo had accelerated her loan and that she owed $93, 046.57. (Id. at 35). The Notice stated that Pantalion had 30 days to “dispute the validity of the debt.” (Id.). Pantalion did not do so, and she has not attempted to pay any part of the loan balance.

         In November 2018, Wells Fargo sued Pantalion seeking a declaration that she was in default and permission to foreclose under the Security Agreement and Texas Property Code § 51.002. (Docket Entry No. 1 at 5). Wells Fargo also requested attorney's fees. (Id.). Attached to the complaint were the Note, the Security Agreement, Notice of Default, and Notice of Acceleration. (Docket Entry No. 1-1).

         Edward Johnson, a process server, served Rhonda Pantalion in person with the summons and complaint, and informed her of those documents' contents, on December 21, 2018, at 2:38 p.m. (Docket Entry No. 6 at 3). The summons stated that if Pantalion failed to respond within 21 days of being served, “judgment by default will be entered” for “the relief demanded in the complaint.” (Id. at 1). Pantalion did not appear, answer, file a Rule 12(b) motion, or request more time to do so. Wells Fargo moved for entry of default and default judgment. (Docket Entry No. 8). The court entered default but declined to enter default judgment, ordering Wells Fargo to “submit the proof of service of the default-judgment motion, the loan's assignment to the mortgage-back[ed] securities trust, and evidence of reasonable attorney's fees.” (Docket Entry No. 9 at 6).

         Wells Fargo has supplemented the record with submitting an affidavit from its counsel; proof that the default judgment motion was sent to Pantalion by certified mail; the loan assignments; and evidence of the reasonable attorney's fees. (Docket Entry No. 18). Wells Fargo argues that Pantalion's failure to appear, answer, or move under Rule 12(b) supports a default judgment, and that the complaint states a plausible claim. (Id. at 1-2; Docket Entry No. 8 at 3-6). Wells Fargo has also moved for $7, 087.66 in attorney's fees, submitting an affidavit and invoices in support. (Docket Entry No. 17). Wells Fargo's motions are considered below.

         II. The Legal Standard

         The court has entered default against Pantalion. (Docket Entry No. 9). After default is entered, a plaintiff may seek default judgment under Federal Rule of Civil Procedure 55(b). See N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). The plaintiff must submit evidence supporting that the defendant has been properly served with the summons, complaint, and the default judgment motion. James Avery Craftsman, Inc. v. Sam Moon Trading Enters., Ltd., No. 16-CV-463, 2018 WL 4688778, at * 3 (W.D. Tex. July 5, 2018); Hazim v. Schiel & Denver Book Grp., No. H-12-1286, 2013 WL 2152109, at *1 (S.D. Tex. May 16, 2013); S.D. Tex. Local R. 5.5 (a default judgment motion “must be served on the defendant-respondent by certified mail (return receipt requested)”). Absent proper service, a district court lacks personal jurisdiction, and any default judgment would be void. Recreational Props., Inc. v. Sw. Mortg. Serv. Corp., 804 F.2d 311, 314 (5th Cir. 1986).

         A “party is not entitled to a default judgment as a matter of right.” Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (per curiam) (quoting Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996)). “Defaults are ‘generally disfavored.'” Koerner v. CMR Constr. & Roofing, L.L.C., 910 F.3d 221, 225 (5th Cir. 2018) (quoting Mason & Hanger-Silas Mason Co. v. Metal Trades Council ofAmarillo & Vicinity, AFL-CIO, 726 F.2d 166, 168 (5th Cir. 1984)). The Fifth Circuit favors “resolving cases on their merits.” Sindhi v. Raina, 905 F.3d 327, 331 (5th Cir. 2018) (quotation omitted). “This policy, however is ‘counterbalanced by considerations of social goals, justice and expediency, a weighing process that lies largely within the domain of the trial judge's discretion.'” Rogers v. Hartford Life & Accident Ins. Co., 167 F.3d 933, 936 (5th Cir. 1999) (alterations omitted) (quoting Pelican Prod. Corp. v. Marino, 893 F.2d 1143, 1146 (10th Cir. 1990)). The court may enter default judgment where “the adversary process has been ...

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