United States District Court, N.D. Texas, Dallas Division
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
REBECCA RUTHERFORD UNITED STATES MAGISTRATE JUDGE
the Court in this civil action is Defendant PennyMac Loan
Services, LLC's (PennyMac) Motion for Summary Judgment
(ECF No. 9). For the following reasons, the District Court
should GRANT the Motion and DISMISS Plaintiffs claims and
causes of action.
action arises out of Defendant PennyMac's attempted
foreclosure of Plaintiff Saul Campos's real property
located in Seagoville, Texas (the "Property").
PL's Original Pet. 1 (ECF No. 1-5). On September 6, 2013,
Campos executed a Note (the "Note") and Deed of
Trust (the "Deed of Trust"), securing repayment of
the Note with the Property, in favor of Integrity Mortgage
Corporation of Texas (Integrity). PL's Original Pet. 3-4.
The Note and Deed of Trust are collectively referred to as
the "Loan." Then, on October 30, 2013, PennyMac
notified Campos that the Loan had been sold to PennyMac on
October 4, 2013, and that PennyMac also serviced the Loan.
Def.'s App. 17 (ECF No. 11). On December 15, 2014,
Mortgage Electronic Registration Systems, Inc. (MERS), as
nominee for Integrity, assigned the Deed of Trust to
PennyMac. PL's Original Pet. 4; Def.'s App. 80-83. On
June 6, 2016, Campos entered a loan modification agreement
with PennyMac. Def.'s App. 85-96. PennyMac currently
possesses the original Note, indorsed in blank. Def.'s
made periodic payments on the Loan from 2013 to 2017.
Def.'s App. 7. He failed to submit his monthly payment
due April 1, 2017, which PennyMac contends remains due.
Id. 25-29, 58-59; Def.'s Br. Support 11. On
April 27, 2017, PennyMac sent Campos a notice of default
specifying the amount to cure the default and further
cautioning that to avoid acceleration Campos must pay the
amount by June 1, 2017. Def.'s App. 34-39. Campos was
unable to cure his default by July 27, 2017, see Id.
25-32, so PennyMac accelerated the Note and provided Campos
notice of acceleration on January 23, 2018. Id.
PennyMac initiated foreclosure proceedings against the
Property, Campos filed an Original Petition and Application
for Temporary Restraining Order in County Court at Law No. 3
of Dallas County, Texas, alleging PennyMac lacks the capacity
to foreclose on the Property and failed to adequately service
his mortgage loan. PL's Original Pet. Based on these
allegations, Campos brings causes of action against PennyMac
for violations of the Texas Debt Collection Act (TDCA),
violations of the Texas Property Code, and breach of
contract. Campos also seeks a declaratory judgment to void
any substitute trustee's deed affecting the Property and
an injunction to prevent foreclosure, as well as damages and
attorney's fees. The state court issued a temporary
restraining order (TRO) preventing the foreclosure sale. TRO
at 2-5 (ECF No. 1-9).
PennyMac filed an answer (ECF No. 1-11) in state court and
then removed the case to this Court on the basis of diversity
jurisdiction. Notice (ECF No. 1). PennyMac subsequently filed
the pending Motion for Summary Judgment, in which it argues
it is legally entitled to foreclose on the Property because
it is the holder of the Note secured by the Deed of Trust
encumbering the Property and because it is both the
"mortgagee" and the "mortgage servicer"
as defined in the Texas Property Code. Def.'s Br.
Support. PennyMac further argues that Campos's claims for
violations of the TDCA, and violations of the Texas Property
Code, and breach of contract fail as a matter of law.
Id. Campos filed a response (ECF No. 14), and
PennyMac filed a reply (ECF No. 16). The Motion is fully
briefed and ripe for adjudication.
preliminary matter, Defendant PennyMac asserts in its Notice
of Removal that Campos improperly joined Integrity, and,
therefore, Integrity's citizenship should not be
considered in determining whether diversity jurisdiction
exists. Notice 5. Integrity has not been served. Id.
jurisdiction requires complete diversity among defendants.
Lincoln Prop. Co. v. Roche, 546 U.S. 81, 83-84
(2005) (citing 28 U.S.C. §§ 1332, 1441(b))
("When federal-court jurisdiction is predicated on the
parties' diversity of citizenship . . . removal is
permissible 'only if none of the parties in interest
properly joined and served as defendants is a citizen of the
State in which [the] action [was] brought.'"). This
rule generally applies irrespective of service. N.Y. Life
Ins. Co. v. Deshotel, 142 F.3d 873, 883 (5th Cir. 1998)
("A non-resident defendant cannot remove an action if
the citizenship of any co-defendant, joined by the plaintiff
in good faith, destroys complete diversity, regardless of
service or non-service upon the co-defendant.");
accord Brown v. Bridges, 2012 WL 5933046, at *3 n.2
(N.D. Tex. Nov. 26, 2012) (considering "the diversity of
all named defendants, regardless of whether all
defendants have been served"). "The improper
joinder doctrine," however, "constitutes a narrow
exception to the rule of complete diversity." Cuevas
v. BACHome Loans Servicing, LP, 648 F.3d 242, 249 (5th
Cir. 2011) (citing McDonal v. Abbott Labs., 408 F.3d
177, 183 (5th Cir. 2005)).
establish improper joinder, the removing party must
demonstrate either: '(1) actual fraud in the pleading of
jurisdictional facts, or (2) [the] inability of the plaintiff
to establish a cause of action against the non-diverse party
in state court.'" Id. (citing Smallwood
v. III. Cent. R. Co., 385 F.3d 568, 573 (5th Cir. 2004)
(en banc)). The removing party's "burden of
demonstrating improper joinder is a heavy one."
Id. (citing Griggs v. State Farm Lloyds,
181 F.3d 694, 699 (5th Cir. 1999)). The test under the second
prong is "whether the defendant has demonstrated that
there is no possibility of recovery by the plaintiff against
an in- state defendant," meaning "there is no
reasonable basis for the district court to predict that the
plaintiff might be able to recover against an in-state
defendant." Smallwood, 385 F.3d at 573
(citations omitted) ("To reduce possible confusion, we
adopt this phrasing of the required proof and reject all
others, whether the others appear to describe the same
standard or not."); accord Int'l Energy Ventures
Mgmt, L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193,
205 (5th Cir. 2016). To determine whether the defendant has
demonstrated plaintiffs inability to recover against the
non-diverse defendant, courts conduct "a Rule
l2(b)(6)-type analysis, looking initially at the allegations
of the complaint to determine whether, under state law, the
complaint states a claim against the in-state
defendant." Larroquette v. Cardinal Health, 200,
Inc., 466 F.3d 373, 376 (5th Cir. 2006) (citing
Smallwood, 385 F.3d at 573). "Ordinarily, if a
plaintiff can survive a Rule 12(b)(6) challenge, there is no
improper joinder." Smallwood, 385 F.3d at 573.
The court's "Rule l2(b)(6)-type analysis ... is used
to resolve the issue of jurisdiction, not merits,"
however, and where a court finds a party is improperly
joined, dismissal without prejudice is appropriate.
Int'l Energy Ventures, 818 F.3d at 210.
PennyMac asserts that Integrity is improperly joined because
there is no reasonable basis for the Court to predict that
Campos can recover against Integrity. Integrity, were it
properly a party, would destroy diversity of citizenship
because it is a Texas corporation. PL's Original Pet. 2.
Accordingly, to determine whether Campos improperly joined
Integrity, the Court must evaluate whether Campos
"pleaded 'enough facts to state a claim to relief
that is plausible on its face.'" Int'l
Energy Ventures, 818 F.3dat 208 (quoting BellAtl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). In his
Petition, Campos appears to assert only one claim against
Integrity: breach of fiduciary duty. PL's Original Pet. 8.
Specifically, Campos contends that "[a]s a mortgage
banker, Integrity had an ongoing fiduciary duty to Plaintiff
to obtain a mortgage loan on the best price and terms
possible." Id. 9. Campos maintains that
Integrity breached this duty by assigning Campos's Loan
to PennyMac and because "the cost of credit to Plaintiff
was higher than otherwise would have been necessary."
Id. 8-9. But Texas law does not recognize a
fiduciary duty between mortgagor and mortgagee. FDIC v.
Coleman, 795 S.W.2d 706, 709 (Tex. 1990) (citing
English v. Fischer, 660 S.W.2d 521, 522 (Tex. 1983);
Lovell v. Western Nat'l Life Ins. Co., 754
S.W.2d 298, 302-303 (Tex. App.- Amarillo 1988, writ denied));
accord Snowden v. Wells Fargo Bank, N.A., 2018 WL
4471794, at *14 (N.D. Tex. Aug. 27, 2018), adopted
by 2018 WL 4467958 (N.D. Tex. Sept. 17, 2018) (quoting
Adams v. U.S. Bank, N.A., 2018 WL 2164520, at *4-*5
(N.D. Tex. Mar, 6, 2018), adopted by 2018 WL 2150957
(N.D. Tex. May 10, 2018)). And Campos has not pleaded that
another special relationship existed between him and
Integrity to give rise to a fiduciary duty. See
PL's Original Pet. Accordingly, the Court finds no
reasonable basis to predict that Campos can recover against
Integrity and that Integrity is improperly joined. Therefore,
Campos's claims against Integrity should be DISMISSED
judgment is appropriate when the pleadings and evidence on
file show that no genuine issue exists as to any material
fact and that the moving party is entitled to judgment as a
matter of law. Fed.R.Civ.P. 56(c). "[T]he substantive
law will identify which facts are material."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). A genuine issue of material fact exists "if the
evidence is such that a reasonable jury could return a
verdict for the non-moving party." Id. The
movant makes a showing that there is no genuine issue of
material fact by informing the court of the basis of its
motion and by identifying the portions of the record which
reveal there are no genuine material fact issues. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The
pleadings, discovery and disclosure materials on file, and
affidavits, if any, must demonstrate that no genuine issue of
material fact exists. Fed.R.Civ.P. 56(c).
the movant makes this showing, the non-movant must then
direct the court's attention to evidence in the record
sufficient to establish that there is a genuine issue of
material fact for trial. Celotex, 477 U.S. at 324.
To carry this burden, the non-movant "must do more than
simply show that there is some metaphysical doubt as to the
material facts." Matsushita Elec. Indus. Co., Ltd.
v. Zenith Radio Corp.,475 U.S. 574, 586 (1986)
(citations omitted). Instead, the non-movant must show that