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Gerke v. Deutsche Bank National Trust Co.

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

July 8, 2019

THERESA B. GERKE Plaintiff.
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2007-1 Defendant.

          MEMORANDUM AND RECOMMENDATION

          ANDREW M. EDISON UNITED STATES MAGISTRATE JUDGE

         Pending before the Court is Defendant's Motion to Dismiss Plaintiffs Amended Complaint and Brief in Support ("Motion to Dismiss"). See Dkt. 11. This motion was referred to this Court by United States District Judge George C. Hanks, Jr. See Dkt. 20. After careful consideration of the Motion to Dismiss, the response, the reply, and applicable law, the Court RECOMMENDS that the Motion to Dismiss be GRANTED.

         FACTUAL ALLEGATIONS [1]

         On December 31, 2018, Plaintiff Theresa B. Gerke ("Gerke") filed suit in the 10th Judicial District Court in Galveston County, Texas, seeking to prevent Defendant Deutsche Bank National Trust Company, as Trustee for NovaStar Mortgage Funding Trust, Series 2007-1 NovaStar Home Equity Loan Asset-Backed certificates, Series 2007-1 ("Deutsche Bank")[2] from foreclosing on her property at 2004 Leisure Lane, League City, Texas 77573 (the "Property"). Deutsche Bank timely removed the case to the United States District Court for the Southern District of Texas (Galveston Division) on the basis of diversity jurisdiction.

         History of the Property:

         In December 2006, Erick Brown ("Brown") purchased the Property. To do so, Brown obtained a loan from NovaStar Mortgage, Inc. ("NovaStar") in the amount of $275, 000.00 (the "Loan"). The Loan was secured by a Note and a Deed of Trust, which were recorded in the real property records of Galveston County, Texas.

         In November 2007, Brown agreed to sell the Property to Ophelia Broussard ("Broussard") and gave her a "General Warranty Deed with Vendor's Lien in Favor of Third Party," which was recorded in the real property records of Galveston County, Texas. At the time of the sale to Broussard, Brown had missed several mortgage payments and had not paid off the Loan.

         Gerke agreed to purchase the Property from Broussard in July 2009. Gerke paid cash for the Property and received a quitclaim deed from Broussard. Importantly, at the time of the purchase, the Loan was still outstanding and the Deed of Trust had not been released.

         In July 2010, NovaStar assigned the Note and Deed of Trust to Deutsche Bank and the assignment was recorded in the property records of Galveston County, Texas. In July 2010, Deutsche Bank provided a notice of foreclosure proceeding to Gerke. However, the foreclosure set for January 2011 was cancelled.

         The First Lawsuit:

         On May 16, 2012, Gerke filed suit in the 212th Judicial District of Galveston County, Texas (the "First Lawsuit"). Deutsche Bank timely removed the First Lawsuit to the United States District Court for the Southern District of Texas (Galveston Division) based on diversity jurisdiction. In the First Lawsuit, Gerke challenged Deutsche Bank's right to assert a security interest against the Property under the Deed of Trust. Specifically, Plaintiff sought to remove cloud and quiet title, void and cancel the substitute trustee's deed, and asserted a trespass to try title cause of action. Gerke also sought a declaratory judgment on the validity of the Deed of Trust and the ownership and title to the Property After a bench trial, District Judge George C. Hanks, Jr. rendered a Final Judgment on January 28, 2016, in favor of Deutsche Bank. In the Findings of Fact and Conclusions of Law, Judge Hanks held that "Deutsche Banks' lien on the [Property] . . . evidenced by the Adjustable Rate Note dated December 21, 2006 and secured by a Deed of Trust of the same ... is a valid and superior lien to which Theresa B. Gerke's title to the Property is subject." Dkt. 11-7.

         The Present Lawsuit:

         In December 2018, Deutsche Bank posted the Property for foreclosure. Seeking to stop that foreclosure sale, Gerke filed this lawsuit. In her Complaint, Gerke brings a declaratory judgment action under Texas Civil Practice and Remedies Code § 16.035(d), asserting that Deutsche Bank "accelerated the underlying Note over 4 years ago, in 2007 and again in 2010" and, as a result, "the [four-year] Statute of Limitations as to [Deutsche Bank's] right foreclose its security interest has expired." Dkt. 10 at 4.

         In response, Deutsche Bank has moved to dismiss this case for failure to state a claim upon which relief can be granted. Specifically, Deutsche Bank claims that (1) the doctrine of res judicata bars Gerke's claims; and (2) Gerke fails to ...


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