902 F.3d 548
5th Cir.2018Background
- Joanna and John Burke executed a Texas home-equity note (2007) secured by a deed of trust naming MERS as beneficiary; payments ceased after December 2009.
- IndyMac Bank failed (2008–2009) and its assets passed through IndyMac Federal/FDIC to OneWest; in January 2011 MERS assigned the deed of trust to Deutsche Bank.
- Deutsche Bank accelerated the mortgage and sued in federal court (2011) for declaratory relief to permit a nonjudicial foreclosure under Texas law.
- A magistrate judge first held the MERS assignment void and found Deutsche Bank lacked foreclosure rights; this panel reversed, holding MERS could validly assign beneficiary rights to Deutsche Bank (prior 5th Cir. opinion).
- On remand the magistrate judge again refused to follow the prior mandate, concluding the earlier panel was clearly erroneous; he entered judgment for the Burkes a second time.
- This appeal holds the magistrate’s refusal to follow the mandate improper, reinstates the prior legal ruling that MERS validly assigned foreclosure rights, and renders judgment for Deutsche Bank.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of MERS assignment of beneficiary/foreclosure rights | Assignment was void because MERS signed as "nominee" and thus lacked authority to assign beneficiary rights | MERS, as beneficiary and nominee, can validly transfer foreclosure rights by assignment of the deed of trust | Assignment valid; MERS can act simultaneously as beneficiary and nominee and transfer foreclosure rights |
| Effect of bank failure/FDIC receivership on assignability | IndyMac’s failure/receivership means no existing principal/successor could authorize assignment, so assignment is invalid | FDIC as receiver can transfer the failed bank’s assets/rights; successors can exist and MERS can assign on their behalf | FDIC/successor can effectuate transfers; failure of lender does not preclude assignment of deed of trust |
| Whether district court could ignore the appellate mandate | Magistrate claimed prior panel was clearly erroneous and would work manifest injustice if followed | Appellate mandate and law-of-the-case/mandate rule bind the district court on remand absent narrow exceptions | District court must follow the mandate; magistrate’s re-litigation was improper and not within narrow exceptions |
Key Cases Cited
- Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444 (5th Cir. 2007) (mandate rule and law-of-the-case principles govern remand conduct)
- Hopwood v. Texas, 236 F.3d 256 (5th Cir. 2000) (standards for reexamining prior panel decisions on remand)
- Harris Cty. v. MERSCORP Inc., 791 F.3d 545 (5th Cir. 2015) (MERS may act as beneficiary and nominee under deed of trust)
- L’Amoreaux v. Wells Fargo Bank, N.A., 755 F.3d 748 (5th Cir. 2014) (lender failure does not preclude MERS’s assignment as nominee when a successor exists)
- City Pub. Serv. Bd. v. Gen. Elec. Co., 935 F.2d 78 (5th Cir. 1991) (clearly erroneous standard requires more than disagreement)
- Concierge Nursing Ctrs., Inc. v. Antex Roofing, Inc., 433 S.W.3d 37 (Tex. App.—Houston [1st Dist.] 2013) (assignment transfers rights under contract)