United States District Court, E.D. Texas, Sherman Division
LUIS A. SANTIAGO, ET AL.
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.
MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF
UNITED STATES MAGISTRATE JUDGE
L. MAZZANT, UNITED STATES DISTRICT JUDGE
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.
underlying facts of this case have been set forth previously;
as such, the Court sets forth only those facts pertinent to
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).
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).
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.
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).
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.
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).
TO REPORT AND RECOMMENDATION
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);
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). 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 ...