Hardaway v. Select Portfolio
20-20224
| 5th Cir. | Jun 28, 2021Background
- Monica and Glenn Hardaway, proceeding pro se, sued in state court alleging Deutsche Bank and Select Portfolio Servicing (SPS) lacked standing to foreclose because assignments from the original lender (Long Beach Mortgage Company) were fraudulent or invalid.
- Defendants removed the case to federal court; the district court granted summary judgment for defendants.
- The district court found the Hardaways had defaulted, there was no break in the chain of title, Deutsche Bank held the note endorsed in blank (giving authority to foreclose), and SPS was the lawful mortgage servicer under Texas law.
- The district court denied the Hardaways leave to appeal in forma pauperis (IFP) and certified the appeal was not taken in good faith.
- The Hardaways moved for IFP on appeal; the Fifth Circuit reviewed the district court’s certification de novo and assessed whether the appeal raised nonfrivolous legal points.
- The Fifth Circuit concluded the Hardaways’ allegations were vague, unsupported, and insufficient to create a genuine, material factual dispute; IFP was denied and the appeal dismissed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / authority to foreclose | Hardaway: defendants lacked legal authority because assignments were fraudulent/invalid | Defendants: even if assignment validity disputed, Deutsche Bank had authority via possession of the endorsed note; SPS was servicer | Court: defendants entitled to foreclose; possession of note endorsed in blank suffices; SPS lawful servicer under Texas law |
| Chain of title / assignment validity | Hardaway: there was a break in the chain of title and forged/invalid assignments | Defendants: chain unbroken or irrelevant because note possession controls; assignments supported by record | Court: no genuine dispute of material fact about chain of title that would defeat summary judgment |
| Effect of note endorsed in blank | Hardaway: endorsement/possession insufficient if assignments invalid or fraudulent | Defendants: possession of the note endorsed in blank confers authority to enforce/foreclose | Court: possession of the note endorsed in blank gave Deutsche Bank authority to foreclose regardless of assignment disputes |
| IFP / good-faith appeal | Hardaway: appeal should proceed IFP; claims raise arguable legal points | Defendants: appeal is frivolous; certification correct | Court: appeal not taken in good faith; IFP denied; appeal dismissed |
Key Cases Cited
- McGarrah v. Alford, 783 F.3d 584 (5th Cir. 2015) (standard for good-faith IFP appeals)
- Hernandez v. Yellow Transp., Inc., 670 F.3d 644 (5th Cir. 2012) (de novo review standard)
- Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808 (5th Cir. 2010) (summary judgment: genuine/material factual disputes and viewing in favor of nonmovant)
- HSBC Bank USA, N.A. as Tr. for Merrill Lynch Mortg. Loan v. Crum, 907 F.3d 199 (5th Cir. 2018) (conclusional allegations insufficient to defeat summary judgment)
- Bynane v. Bank of N.Y. Mellon for CWMBS, Inc. Asset-Backed Certificates Series 2006-24, 866 F.3d 351 (5th Cir. 2017) (applying Texas mortgage law principles)
- Sierra Equip., Inc. v. Lexington Ins. Co., 890 F.3d 555 (5th Cir. 2018) (diversity jurisdiction => apply state law)
- Baugh v. Taylor, 117 F.3d 197 (5th Cir. 1997) (IFP appellate review limited to trial court’s reasons for certification)
- Deville v. Marcantel, 567 F.3d 156 (5th Cir. 2009) (do not weigh credibility at summary judgment; view facts in favor of nonmovant)