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Kormanik v. The Bank of New York Mellon

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

July 3, 2019

RONALD J. KORMANIK, Plaintiff,
v.
THE BANK OF NEW YORK MELLON AS TRUSTEE FOR CWABS, INC. ASSET-BACKED CERTIFICATES SERIES 2005-17, Defendant.

          MEMORANDUM OPINION AND ORDER

          SIM LAKE UNITED STATES DISTRICT JUDGE

         Plaintiff Ronald J. Kormanik ("Plaintiff") sued defendant The Bank of New York Mellon as Trustee for CWABS, Inc. Asset-Backed Certificates Series 2005-17 (the "Trustee") in the 215th District Court of Harris County, Texas (the "State Court"), alleging that the Trustee is improperly attempting to foreclose on his real property located at 1122 Barkston Drive, Katy, Texas 77450 (the "Property"), [1]The Trustee timely removed the action on October 9, 2018.[2] Pending before the court is Defendant's Motion for Summary Judgment on all Claims, Counterclaims and Third Party Claims and Brief in Support (the "Trustee's MSJ" or the "Trustee's Motion for Summary Judgment") (Docket Entry No. 14) . For the reasons explained below, the Trustee's Motion for Summary Judgment will be granted.

         I. Factual and Procedural Background

         On October 4, 2005, Plaintiff executed a $149, 688.00 Texas Home Equity Note (the "Note") in favor of his original lender, Countrywide Home Loans, Inc. (the "Original Lender").[3] The Note was secured by the Security Instrument, [4] which established a first lien on the Property.[5] During the closing Plaintiff also signed a Texas Home Equity Affidavit and Agreement (the "Affidavit").[6]

         Plaintiff defaulted on the Loan in July of 2014 and remains in default.[7] Notice of Default was sent to Plaintiff and his wife, Carol Kormanik ("Mrs. Kormanik"), via certified mail on August 15, 2014.[8] On September 25, 2014, Mortgage Electronic Registration Systems, Inc. ("MERS") as nominee for the Original Lender assigned the Security Instrument to the Trustee and recorded the assignment in the Harris County real property records.[9] A second notice of default was sent to Plaintiff via certified mail on January 4, 2018.[10] Notice of acceleration was sent to Plaintiff via certified mail on February 7, 2018.[11] Select Portfolio Servicing, Inc. ("SPS") is the current duly authorized mortgage servicer for the Loan.[12]

         Plaintiff filed this action in the State Court on October 1, 2018.[13] The Trustee timely removed on October 9, 2018.[14] On November 30, 2018, the Trustee filed a counterclaim seeking an order of foreclosure and a declaration of its right to foreclose.[15] On the same date, the Trustee filed its third party claim against Mrs. Kormanik seeking an order authorizing foreclosure because Mrs. Kormanik is a necessary party to any request for foreclosure.[16]Mrs. Kormanik filed an answer on January 10, 2019.[17] The Trustee filed its Motion for Summary Judgment on February 14, 2019.[18]Plaintiff moved for an extension of time to respond to the Trustee's Motion for Summary Judgment on February 27, 2019.[19] The court granted Plaintiff's motion and ordered Plaintiff to respond to the Trustee's Motion for Summary Judgment by March 14, 2019.[20]Plaintiff did not file a response. For the reasons explained below, the Trustee's Motion for Summary Judgment will be granted.

         II. Summary Judgment Standard

         Summary judgment is appropriate if the movant establishes that there is no genuine dispute about any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). Disputes about material facts are genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2510 (1986). The moving party is entitled to judgment as a matter of law if "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2552 (1986) .

         A party moving for summary judgment "must 'demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant's case." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam) (quoting Celotex, 106 S.Ct. at 2553). "If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response." Id. If the moving party meets this burden, Rule 56(c) requires the nonmovant to go beyond the pleadings and show by affidavits, depositions, answers to interrogatories, admissions on file, or other admissible evidence that specific facts exist over which there is a genuine issue for trial. Id. The nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 106 S.Ct. 1348, 1356 (1986) .

         In reviewing the evidence "the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Products, Inc., 120 S.Ct. 2097, 2110 (2000) . The court resolves factual controversies in favor of the nonmovant, "but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Little, 37 F.3d at 1075.

         III. Analysis

         Pursuant to the local rules of this district, "failure to respond to a motion will be taken as a representation of no opposition." Local Rules of the United States District Court for the Southern District of Texas LR 7.4. Because Plaintiff failed to respond to the Trustee's Motion for Summary Judgment, the court will treat the Motion as though it is unopposed by Plaintiff. The court will nevertheless consider the Trustee's Motion for Summary Judgment on the merits.

         In his Petition, Plaintiff seeks a declaration that the Trustee lacks standing to foreclose on the Property.[21] The Trustee argues that Plaintiff's declaratory relief claim lacks merit and that the Trustee is entitled to an order authorizing it to foreclose on the Property.[22]

         A. Plaintiff's Claim for Declaration of the Trustee's Lack of Standing to Foreclose

         "Under Texas Property Code §§ 51.002, 51.0025, the mortgagee or mortgage servicer may foreclose upon" real property secured by a security instrument when a borrower defaults. See Flowers v. Deutsche Bank National Trust Co., 614 Fed.Appx. 214, 216 (5th Cir. 2 015) . While a mortgagee can be the original holder of a security instrument (in this case, the Original Lender), a mortgagee can also be the most recent assignee of record of a security interest. Tex. Prop. Code § 51.0001(4). The Trustee is the most recent assignee of record of the Security Instrument and holder of the Note, and is therefore the current mortgagee on the Loan. As the mortgagee, the Trustee has all the rights in the Property that the Original Lender held at the time of the assignment, including the right to foreclose in the event that Plaintiff defaults.[23]

         In his Petition, Plaintiff alleges that the Trustee lacks standing to foreclose on the Property because the assignment of the Original Lender's interest in the Loan to the Trustee was improper.[24] Plaintiff alleges that he was never given proper notice of the assignment.[25] "[U]nder Texas law, facially valid assignments cannot be challenged for want of authority except by the defrauded assignor." Reinagel v. Deutsche Bank National Trust Co., 735 F.3d 220, 228 (5th Cir. 2013) . Plaintiff, as the borrower on the Loan, therefore has no standing to challenge MERS's assignment of the Original Lender's interest to the Trustee. Furthermore, the assignment of the Security Instrument to the Trustee was recorded in the Harris County real property records, providing Plaintiff with notice of the assignment. ...


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