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Campos v. Integrity Mortgage Corporation of Texas

United States District Court, N.D. Texas, Dallas Division

September 9, 2019

SAUL CAMPOS, Plaintiff,



         Before 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.


         This 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 App. 6.

         Campos 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. 48-50.

         After 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).

         Thereafter, 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 Matters

         As a 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. 2.

         Diversity 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)).

         "To 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.

         Here, 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.[1] 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 without prejudice.

         Legal Standard

         Summary 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).

         Once 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 ...

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