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Hernandez v. Mortgage Electronic Registration Systems, Inc.

Court of Appeals of Texas, First District

October 22, 2019

JUAN HERNANDEZ AND MARIA HERNANDEZ, Appellants
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., HOUSEHOLD FINANCE CORPORATION III, U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF8 MASTER PARTICIPATION TRUST, AND CALIBER HOMES LOAN, INC., Appellees

          On Appeal from the 133rd District Court Harris County, Texas Trial Court Case No. 2015-32570

          Panel consists of Justices Lloyd, Goodman, and Landau.

          MEMORANDUM OPINION

          Sarah Beth Landau, Justice

         This appeal challenges a trial court's dismissal of Juan Hernandez and Maria Hernandez's claims asserted against a lender, its predecessors-in-interest, and its loan servicer. The controversy stems from the Hernandezes' home-equity loan and their failure to make the required payments on the loan. We find jurisdiction to review, and we affirm both orders from which the Hernandezes appeal.

         Background

         This dispute has a long and torturous history, starting out in state court, then removal and remand, continuing with a flood of motions in the district court, and ending with summary judgment.

         Juan Hernandez and Maria Hernandez took out a $145, 600 home-equity loan from Town and Country Credit Corporation in 2004. To secure repayment, the Hernandezes signed a deed of trust along with the note. The deed of trust granted Town and Country a first-lien security interest in the Hernandezes' home. Town and Country then assigned the note and deed of trust to Ameriquest Mortgage Company, [1] which later assigned the note and deed of trust to Mortgage Electronic Registration Systems, Inc. ("MERS"). MERS eventually assigned the loan to Household Finance Corporation III ("HFC").

         In 2011, the Hernandezes defaulted on their monthly loan payments. After satisfying the statutory notice and other procedural requirements, HFC obtained a court order authorizing foreclosure on the property. U.S. Bank Trust, N.A., as Trustee for LSF8 Master Participation Trust ("U.S. Bank Trust"), bought the property at a foreclosure auction in 2015. HFC then assigned the note and deed of trust to U.S. Bank Trust. Caliber Home Loans, Inc. ("Caliber") was servicer of the note and deed of trust at all times relevant to the foreclosure sale and the notices of the sale.

         U.S. Bank Trust gave notice to the Hernandezes to surrender possession of the property. The Hernandezes did not surrender possession, and U.S. Bank Trust filed a forcible detainer action in justice court to evict them from the property. The justice court issued an order to evict the Hernandezes in 2015.

         The Hernandezes appealed the justice court's eviction order to the county court, and the county court ruled that U.S. Bank Trust was entitled to immediate possession of the property and to a writ of possession if the Hernandezes failed to vacate the premises within one week.

         Without complying with this possession order, the Hernandezes then sued U.S. Bank Trust, Caliber, HFC, and MERS in state district court[2] and alleged the following claims: (1) violation of the Texas Civil Practice and Remedies Code section 12.002 (addressing liability related to use of fraudulent court record or lien or claim against property); (2) violation of the Texas Penal Code sections 32.21 (defining criminal forgery) and 32.47 (prohibiting fraudulent destruction, removal, or concealment of writing); (3) negligence per se; (4) gross negligence; (5) lack of standing to foreclose; (6) statutory fraud; (7) violation of the Truth in Lending Act; (8) violation of the Texas Constitution article XVI, section 50(a)(6)(D); (9) violation of the Texas Property Code § 51.0075(e); (10) for declaratory relief; (11) to quiet title; and (12) "breach of contract/lack of contractual standing."

         U.S. Bank Trust, MERS, and Caliber removed the case to federal court on federal question jurisdiction (the Truth in Lending Act claim). Caliber and U.S. Bank Trust moved for summary judgment. In September 2016, the federal district court granted Caliber and U.S. Bank Trust's motion for summary judgment and disposed of the claims for lack of standing to foreclose, statutory fraud, the Truth in Lending Act, the Texas Constitution article XVI, section 50(a)(6)(D), Texas Property Code section 51.0075(e), declaratory relief, quiet title, and breach of contract/lack of standing. The federal court held that U.S. Bank Trust had standing to foreclose and "establish[ed] it is the proper holder of the note and deed of trust" and that the Hernandezes lacked standing to challenge the assignments.

         The Hernandezes filed a motion for leave to amend their complaint and a motion for remand, both seeking to non-suit the violation of the Truth in Lending Act claim against all parties. In January 2017, the magistrate judge filed a report and recommendation denying supplemental jurisdiction over the remaining state law claims and remanding the Hernandezes's remaining claims to state court. The magistrate judge also recommended denying the other pending motions without prejudice to being asserted in state court upon remand. The district court signed an order adopting the recommendations, dismissing the Truth in Lending Act claim against Caliber, HFC, MERS, and U.S. Bank Trust, and remanded the case to state court.[3] The Hernandezes did not appeal that order.[4]

         On remand, the Hernandezes filed a third amended petition and added several new causes of action against MERS and HFC, and one ...


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