United States District Court, S.D. Texas, Galveston Division
THERESA B. GERKE Plaintiff.
DEUTSCHE BANK NATIONAL TRUST COMPANY, AS TRUSTEE FOR NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2007-1 Defendant.
MEMORANDUM AND RECOMMENDATION
M. EDISON UNITED STATES MAGISTRATE JUDGE
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
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") 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
of the Property:
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.
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.
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.
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.
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.
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.
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