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Santiago v. Bank of New York Mellon

United States District Court, E.D. Texas, Sherman Division

September 10, 2019

LUIS A. SANTIAGO, ET AL.
v.
THE BANK OF NEW YORK MELLON, AS SUCCESSOR TRUSTEE TO JPMORGAN CHASE BANK, AS TRUSTEE FOR NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2004-2, NOVASTAR HOME EQUITY LOAN ASSET-BACKED CERTIFICATES, SERIES 2004-2, ET AL.

          Nowak, Judge

          MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

         Came on for consideration the report of the United States Magistrate Judge in this action, this matter having been heretofore referred to the Magistrate Judge pursuant to 28 U.S.C. § 636. On December 27, 2018, the report of the Magistrate Judge (Dkt. #44) was entered containing proposed findings of fact and recommendations that Defendants' Motion to Dismiss Plaintiff's First Amended Original Complaint (Dkt. #30) be granted. Having received the report of the Magistrate Judge, having considered Plaintiff's Objection (Dkt. #47), Defendants' Response (Dkt. #56), and having conducted a de novo review, the Court is of the opinion that the Magistrate Judge's report should be adopted.

         RELEVANT BACKGROUND

         The underlying facts of this case have been set forth previously; as such, the Court sets forth only those facts pertinent to Plaintiff's Objection.

         On May 14, 2004, Plaintiffs purchased the real property located at: 5102 Spanish Oaks, Frisco, Texas 75034 (the “Property”) by executing a Texas Home Equity Note and Security Instrument in favor of Defendants (collectively the “Loan”) (Dkt. #26 at p. 4). Plaintiffs are in default under the Loan, having made their last payment in 2010 (Dkts. #18; #30 at p. 2). On January 14, 2011, Defendants accelerated the Loan (Dkt. #26 at p. 5).

         On May 16, 2011, Plaintiffs filed suit against Defendants in the 296th Judicial District Court of Collin County, Texas (the “2011 State Court Lawsuit”), Cause No. 296-02073- 2011. Plaintiffs claimed that Defendants' interest in the Property was voided because of certain constitutional violations that originated at closing. Specifically, Plaintiffs asserted that the Home Equity Affidavit was forged and that Plaintiffs failed to receive a copy of it (Dkts. #8-3; #26 at p. 11; #26-6). On October 12, 2011, Defendants raised a counterclaim seeking an order for foreclosure (Dkts. #8-3 at p. 3; #26-6 at p. 3). On March 28, 2013, the state court granted Defendants' Motion for Summary Judgment, ordering that Defendants “may conduct a nonjudicial foreclosure of the [P]roperty, ” which “shall be accomplished as a trustee's sale, ” and entered a final judgment (Dkts. #8-2; #26-6 at p. 3). On May 3, 2013, Plaintiffs filed their Notice of Appeal (Dkt. #26-10). The Parties agreed to stay enforcement of the judgment pending appeal (Dkts. #26-6; #26-10). On August 28, 2014, the state appellate court affirmed the state court, and on February 27, 2015, the Texas Supreme Court denied review and on April 17, 2015, denied rehearing. See also Santiago v. Novastar Mortg., Inc., 443 S.W.3d 462 (Tex. App.-Dallas 2014, pet. denied), abrogated in part by Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542, 547-51 & n.2 (Tex. 2016).

         Plaintiffs filed another suit against Defendants on March 31, 2015, seeking to stop foreclosure, in the 296th Judicial District Court of Collin County, Texas (the “2015 State Court Lawsuit”), Cause No. 296-01232-2015. Plaintiffs asserted claims for breach of contract, rescission, anticipatory breach of contract, and quiet title (Dkt. #26-11). The Property was sold at a February 2, 2016 foreclosure sale, and as a result, Plaintiffs filed a further suit, requesting that the state court set aside the foreclosure sale, in the 296th Judicial District Court of Collin, County, Texas (the “2016 State Court Lawsuit”), Cause No. 269-0749-2016. Summary judgment was granted in favor of Defendants, dismissing Plaintiffs' claims. The state appellate court thereafter partially reversed the trial court, and the foreclosure sale was set aside on the issue of notice.

         Subsequent to the 2011 State Court Lawsuit and the order permitting Defendants to conduct a nonjudicial foreclosure of the Property, Defendants have attempted to foreclose on numerous occasions, as many as six different times. See e.g., Santiago v. Bank of New York Mellon, No. 05-17-00144-CV, 2017 WL 4946095 (Tex. App.-Dallas Nov. 1, 2017, no pet., h.) (mem. op.); Santiago v. Bank of New York Mellon, No. 05-16-00053-CV, 2017 WL 1326054 (Tex. App.- Dallas Apr. 11, 2017, pet denied) (mem. op.); Santiago v. Mackie Wolf Zientz & Mann, P.C., No. 05-16-00394- CV, 2017 WL 944027 (Tex. App.-Dallas Mar. 10, 2017, pet denied) (mem. op.); Santiago v. Bank of New York Mellon, No. 05-15-00664-CV, 2016 WL 297383 (Tex. App.- Dallas Jan. 25, 2016, no pet.) (mem. op.); Santiago v. Novastar Mortg., Inc., 443 S.W.3d 462 (Tex. App.-Dallas 2014, pet. denied), abrogated in part by Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542, 547-51 & n.2 (Tex. 2016).

         On July 31, 2018, Plaintiffs filed the instant lawsuit (Dkt. #1). On August 7, 2018, the Property was sold at foreclosure (Dkts. #26 at p. 17; #26-3; #26-4). On August 20, 2018, Plaintiffs amended their complaint, seeking to invalidate the August 7 foreclosure sale, and asserting claims for quiet title, defamation, and multiple requests for declaratory relief, as well as numerous defenses (Dkt. #26). Specifically, Plaintiffs argue that Defendants' lien is void ab initio because Defendants violated the Texas Constitution by not presenting the Home Equity Affidavit to Plaintiffs at closing, and further, Defendants are time-barred from pursuing foreclosure because the foreclosure sale was not completed within four years of accelerating the Loan. Plaintiffs continue that the notices of foreclosure received by Plaintiffs and oral statements at the foreclosure sale defame Plaintiffs.

         The Magistrate Judge entered a Report and Recommendation, recommending that Defendants' Motion to Dismiss be granted, and Plaintiffs' claims be dismissed (Dkt. #44). Specifically, the Report found that: “(1) Plaintiffs' claims that Defendants' lien is void as a result of violations of the Texas Constitution are barred by res judicata; (2) Defendants are not time-barred from pursuing foreclosure as they properly filed suit within four years of acceleration pursuant to section 16.035(a); (3) Plaintiffs' quiet title claim is defective because Plaintiffs have not tendered the amount due and owing on the note; and (4) Plaintiffs have failed to adequately plead what statements in the foreclosure notices were defamatory, how they were defamatory, and/or how Plaintiffs were thereby injured” (Dkt. #44 at p. 6). Plaintiffs filed their objections on January 9, 2019 (Dkt. #47). After being granted an extension of time, Defendants filed a response to such objections on February 6, 2019 (Dkt. #56).[1]

         OBJECTIONS TO REPORT AND RECOMMENDATION

         A party who files timely written objections to a magistrate judge's report and recommendation is entitled to a de novo review of those findings or recommendations to which the party specifically objects. 28 U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b)(2)-(3).

         As an initial matter, the Court notes Plaintiffs' objections are well over the page limit of eight (8) pages set forth in Local Rule CV-72(c).[2] Plaintiffs did not request leave to file objections in excess of the page limits. Notwithstanding, the Court has considered Plaintiff's arguments and finds the same to be without merit, as discussed infra. Plaintiffs assert that they have fifty-one (51) separate objections; each of these various objections are directed at challenging four (4) of the Report's findings: (1) res judicata is inapplicable to the instant case because the instant suit and the 2011 State Court Lawsuit do not involve a common nucleus of operative facts; (2) Defendants' ability to foreclose on the Property is time-barred because Defendants did not foreclose on the Property within the parameters of ...


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