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Holliday v. Select Portfolio Servicing, Inc.

United States District Court, W.D. Texas, San Antonio Division

December 13, 2019




         Before the Court is the above-captioned action in which Andres M. Holliday, Araceli M. Holliday, and Michael Joseph Kearns are Plaintiffs and Mortgage Electronic Servicing, Select Portfolio Servicing, Inc., and Wells Fargo Bank, N.A. are named as Defendants.

         The court notes that the original petition and attachments in this action are substantially similar to a complaint filed by Andres M. Holliday and Araceli M. Holliday in this court under No. 5:11-CV-1133. In the previous action, Plaintiffs alleged causes of action under the RICO Act, Truth in Lending Act, Regulation Z, and RESPA. Plaintiffs now assert that the same facts support a cause of action for trespass to try title, damages under the Texas Deceptive Trade Practices Act, and for declaratory judgment.[1] Because the claims in Plaintiffs' prior action were dismissed with prejudice, the claims asserted here are clearly barred by res judicata.

         I. Procedural History: The Present Action

         On February 15, 2019, Plaintiffs filed a petition in the 57th Judicial District Court of Bexar County, Texas, alleging they are the owners of property located at 6629 Kings Crown East, San Antonio, Texas 78233. ECF No. 1-4. The petition named as Defendants Mortgage Electronic Servicing (“MERS”), Select Portfolio Servicing, Inc. (“Select”), Wells Fargo Bank, N.A., and McCarthy & Holthus, LLP (“McCarthy”). Plaintiffs' petition seeks to prevent foreclosure of the property, alleging claims for trespass to try title and declaratory judgment. Id. On February 28, 2019, a temporary restraining order was issued in state court, preventing the sale of the property. ECF No. 1-7; ECF No. 1-8.

         On March 8, 2019, Defendants removed the action to this Court on the basis of diversity jurisdiction. ECF No. 1. On March 20, 2019, Plaintiffs timely filed their original motion to remand (ECF No. 3), then filed an amended motion to remand on April 18, 2019 (ECF No. 18), and a supplemental motion to remand on April 29, 2019 (ECF No. 21). Defendants MERS, Select, and Wells Fargo filed a response in opposition to the first two motions to remand on April 25, 2019 (ECF No. 20). On March 27, 2019, Defendant McCarthy filed a motion to dismiss (ECF No. 8). Plaintiffs filed a response in opposition on April 8, 2019 (ECF No. 13); McCarthy filed a reply on April 10, 2019 (ECF No. 14). Plaintiffs also filed motions for judicial notice and for sanctions (ECF Nos. 21, 22, 23).

         On May 29, 2019, the Honorable David A. Ezra denied Plaintiffs' Amended Notice of Fraudulent Removal and Demand to Remand to State Court (ECF Nos. 3, 18); granted McCarthy's Motion to Dismiss (ECF No. 8); denied Plaintiffs' Supplemental Motion for Remand (ECF No. 21), Motion for Judicial Notice and for Sanctions (ECF No. 22), and Second Demand for Judicial Notice (ECF No. 23). Judge Ezra's Order cautioned Plaintiffs against filing frivolous or superfluous filings, warning that the Court will consider sanctions and entertain a motion by Defendants for fees and costs in responding to Plaintiffs' frivolous filings. ECF No. 26.

         On July 22, 2019, the remaining named Defendants filed their Motion for Judgment on the Pleadings (ECF No. 33). This motion was followed by Plaintiffs' pro se Independent Action Complaint | Complaint for Declaratory Judgment, docketed as pro se Motion for Declaratory Judgment (ECF No. 38); Defendants' Motion to Strike, Motion to Dismiss (ECF No. 41); Plaintiffs' pro se Demand to Take Judicial Notice and Demand for Immediate Order/Judgment, docketed as a motion (ECF No. 44); and Plaintiffs' pro se Demand for Felony Criminal Indictment, for Aggravated Perury, (sic) Fraud on the Court, and Conspiracy to Commit the Above, docketed as a motion (ECF No. 45).

         The action was reassigned to the undersigned on August 12, 2019 (ECF No. 42).

         II. Legal Standard

         A court may dismiss an action “sua sponte on res judicata grounds . . . in the interest of judicial economy where both actions were brought before the same court.” McIntyre v. Ben E. Keith Co., 754 Fed.Appx. 262, 264-65 (5th Cir. 2018) (per curiam) (quoting Mowbray v. Cameron Cty., 274 F.3d 269, 281 (5th Cir. 2001)). “[I]f a court is on notice that it has previously decided the issue presented, the court may dismiss the action sua sponte, even though the defense has not been raised.” Arizona v. California, 530 U.S. 392, 412 (2000). Dismissal under Rule 12(b)(6) on res judicata grounds is appropriate when the elements of res judicata are apparent on the face of the pleadings. Dean v. Miss. Bd. of Bar Admissions, 394 Fed.Appx. 172, 175 (5th Cir. 2010).

         III. Discussion

         Res judicata bars “the litigation of claims that either have been litigated or should have been raised in an earlier suit.” Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 571 (5th Cir. 2005). A prior judgment bars a subsequent judgment when (1) the parties are identical or in privity; (2) the judgment in the prior action was rendered by a court of competent jurisdiction; (3) the prior action was concluded by a final judgment on the merits; and (4) the same claim or cause of action was involved in both actions. Id. As to the fourth condition, “[t]he critical issue is whether the two suits are based on the ‘same nucleus of operative facts.'” Id. In other words, the fourth condition is met if the claims could or should have been brought in the first action. Nilsen v. City of Moss Point, 701 F.2d 556, 561 (5th Cir. 1983). “True res judicata bars recovery when a party seeks to relitigate the same facts even when the party argues a novel legal theory.” Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512, 522 (5th Cir. 2016).

         First, the parties common to this action and the previous action are Andres M. Holliday, Araceli M. Holliday, and Wells Fargo Bank, N.A. The parties named in this action that were not named in the previous action are Defendants Mortgage Electronic Servicing and Select Portfolio Servicing, and Plaintiff Michael Joseph Kearns. As the mortgage holder and mortgage servicer, Wells Fargo Bank, N.A. and Select Portfolio Servicing are in privity for res judicata purposes. “The relationship between a mortgage holder, a mortgage servicer, and a mortgage lender's nominee is generally sufficient to establish the privity needed for res judicata.” Bellot v. Wells Fargo Bank, N.A., No. CIV.A. H-13-2014, 2014 WL 2434170, at *2 (S.D. Tex. May 29, 2014) (citing Maxwell v. U.S. Bank, N.A., 544 Fed.Appx. 470, 473 (5th Cir. 2013)). ...

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