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Ouabderhm v. The Money Source, Inc.

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

July 24, 2019

JENNIFER OUABDERHM, Plaintiff,
v.
THE MONEY SOURCE, INC., Defendant.

          MEMORANDUM AND ORDER

          LEE H. ROSENTHAL CHIEF UNITED STATES DISTRICT JUDGE.

         In March 2019, Jennifer Ouabderhm sued The Money Source, Inc., a mortgage servicer, over a foreclosure dispute, asserting fraud, negligent misrepresentation, violations of the deed of trust and the Texas Property Code, and wrongful possession of collateral. The Money Source has moved for summary judgment, arguing that Daniel Bush, Ouabderhm's husband and coborrower, is a necessary party who must be joined under Federal Rule of Civil Procedure 19, and that there is no record evidence supporting Ouabderhm's claims. Ouabderhm responded, and The Money Source replied.

         After a review of the pleadings; the motion, response, and reply; the record evidence; and the applicable law, the court denies, without prejudice, The Money Source's summary judgment motion. (Docket Entry No. 14). Ouabderhm must file an amended complaint adding Bush as a party by August 23, 2019. The Money Source must file any subsequent motion for summary judgment by September 13, 2019, Ouabderhm and Bush must respond by October 4, 2019, and The Money Source may reply by October 11, 2019. The reasons for these rulings are explained in detail below.

         I. Background

         In August 2016, Ouabderhm and Daniel Bush obtained a loan from Houstonian Mortgage Group, Inc. to buy a home in Willis, Texas. (Docket Entry No. 14-1 at 8). Their promissory note required them to pay $972.90 on the first day of each month for 30 years, beginning on October 1, 2016. (Id.). The note was secured by a deed of trust that Ouabderhm and Bush also signed in August 2016. (Docket Entry No. 1 at 13). The Money Source began servicing Ouabderhm's and Bush's mortgage in October 2016. (Docket Entry No. 14-1 at 2).

         Ouabderhm and Bush failed to make their loan payments for October and November 2016. (Id. at 3). In December 2016, Ouabderhm asked The Money Source for mortgage assistance, claiming that Bush had lost his job and that they did not have enough income to pay the monthly amount under the note. (Id.). The Money Source granted Ouabderhm and Bush a temporary forbearance in February 2017, which required them to pay $612.43 each month from March to August 2017. (Docket Entry No. 14-1 at 12-16). Ouabderhm and Bush made the reduced payments, but the mortgage remained in default. (Docket Entry No. 14 at 4-5).

         On September 6, 2017, The Money Source sent Ouabderhm and Bush notice by certified mail that they remained in default, the company intended to accelerate the loan, and that if Ouabderhm and Bush did not cure the default, The Money Source would foreclose on the property. (Docket Entry No. 14-1 at 19-21). Ouabderhm and Bush applied for another forbearance on September 13, 2017, which The Money Source granted in October 2017. (Id. at 25). Under the second forbearance, Ouabderhm and Bush were not required to make a mortgage payment until February 1, 2018. (Id. at 26).

         On March 21, 2018, Ouabderhm applied for an extension of the second forbearance. (Docket Entry No. 15-1 at 22). The Money Source denied the request on April 3, 2018, explaining that the “application does not meet program guidelines.” (Docket Entry No. 14-1 at 30). On April 27, The Money Source sent Ouabderhm and Bush a letter notifying them that they were “in default” and that it had “initat[ed] foreclosure proceedings to seek resolution of the loan balance.” (Docket Entry No. 15-4 at 5). On June 11, 2018, The Money Source's substitute trustee filed a notice of trustee's sale scheduling the foreclosure of Ouabderhm's and Bush's property on August 7, 2018. (Docket Entry No. 14-2 at 24). On June 28, 2018, The Money Source denied Ouabderhm's application for loss-mitigation assistance because it did not have enough documentation of Ouabderhm's and Bush's income. (Docket Entry No. 14-1 at 33).

         On August 7, 2018, The Money Source's substitute trustee foreclosed on Ouabderhm's and Bush's home. (Docket Entry No. 14 at 7). On March 8, 2019, The Money Source, the foreclosing beneficiary and purchaser at the sale, obtained a state-court judgment that Ouabderhm and Bush were no longer entitled to possess the home. (Docket Entry No. 4-1 at 19). The judgment required Ouabderhm and Bush to post a $1, 000 bond to file an appeal. (Id.).

         Instead of posting the bond and appealing the judgment, Ouabderhm sued The Money Source in state court on the same day the judgment was entered, alleging fraud, negligent misrepresentation, “[non]compliance with Texas Sale Procedures, ” and wrongful possession of collateral. (Docket Entry No. 1 at 10-11). The Money Source timely removed. (Docket Entry No. 1). In April 2019, Ouabderhm applied for a temporary restraining order to enjoin the state-court judgment. (Docket Entry No. 4). The court denied the temporary restraining order application and directed the parties to exchange the loan documents and communications between Ouabderhm and The Money Source. (Docket Entry No. 9). The Money Source moved for summary judgment in June 2017, arguing that Bush is a necessary party who must be joined under Rule 19, and that there is no record evidence supporting Ouabderhm's claims. (Docket Entry No. 14). Ouabderhm responded, and The Money Source replied. (Docket Entry Nos. 15, 16).

         II. The Legal Standards

         A. Summary Judgment

         “Summary judgment is appropriate only when ‘the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'” Shepherd on Behalf of Estate of Shepherd v. City of Shreveport, 920 F.3d 278, 282-83 (5th Cir. 2019) (quoting Fed.R.Civ.P. 56(a)). “A material fact is one that might affect the outcome of the suit under governing law, ” and “a fact issue is genuine if the evidence is such that a reasonable jury could return a verdict for the non-moving party.” Renwick v. PNK Lake Charles, L.L.C., 901 F.3d 605, 611 (5th Cir. 2018) (quotations and citations omitted). The moving party “always bears the initial responsibility of informing the district court of the basis for its motion, ” and identifying the record evidence “which it believes demonstrate[s] the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

         “Where the non-movant bears the burden of proof at trial, ‘the movant may merely point to the absence of evidence and thereby shift to the non-movant the burden of demonstrating that there is an issue of material fact warranting trial.'” Kim v. Hospira, Inc., 709 Fed.Appx. 287, 288 (5th Cir. 2018) (alteration omitted) (quoting Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015)). The moving party must demonstrate the absence of a genuine issue of material fact, but it need not negate the elements of the nonmovant's case. Austin v. Kroger Tex., L.P., 864 F.3d 326, 335 (5th Cir. 2017). “If the moving party fails to meet [its] initial burden, the motion must be denied, ...


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