Miller v. Homecomings Financial, LLC
881 F. Supp. 2d 825
S.D. Tex.2012Background
- Plaintiffs seek declaratory relief and injunction to prevent foreclosure on Texas property.
- 2003 loan: $184,800 home equity loan from Homecomings Financial Network, recorded as a lien.
- 2007 transfer: David Miller purchases the property from Joan Miller by special warranty deed; recording occurs.
- 2011: Mellon obtains a Rule 736 order to foreclose under Tex. Prop. Code § 51.002; Mellon had an assignment from JPMorgan Chase Bank as Trustee (Residential Funding Corp.) in 2011.
- Original lender (Homecomings) allegedly did not assign the note or security interest to Chase, Mellon, or others; chain of title is disputed.
- Plaintiffs filed suit in state court Oct. 28, 2011; case removed to federal court; magistrate judge denied some relief but allowed repleading; court-defers ruling on some sunken issues and directs amended complaint if pursuing non-wrongful-foreclosure claims by Sept. 7, 2012.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs state a cognizable claim to prevent foreclosure | Miller plaintiffs challenge chain of title for enforceability | Foreclosure authority exists if proper chain of title is shown | Yes; plaintiffs state cognizable wrongful-foreclosure claims |
| Standing to challenge the assignment of the security interest | Homeowners have standing to challenge the assignment chain | Only parties to the assignment have standing | Yes; homeowners may challenge the chain of title regardless of being nonparties to the assignment |
| Adequacy of the chain of title and evidence of transfer to Mellon | There is no public-record chain from original lender to Mellon | Assignments to Mellon supposedly exist and may authorize foreclosure | Issues exist; plaintiff states claims but must plead complete chain of title; unbroken chain not shown on record at this stage |
| Handling of other state/federal claims and need to replead | Plaintiffs may replead remaining causes of action | Claims are insupportable or unclear | plaintiffs may replead such claims in amended complaint by Sept. 7, 2012 |
Key Cases Cited
- League City State Bank v. Mares, 427 S.W.2d 336 (Tex.Civ.App.-Houston [14th Dist.] 1968) (wrongful foreclosure recognized in Texas)
- Martin v. New Century Mortgage Co., 377 S.W.3d 79 (Tex.App.-Houston [1st Dist.] 2012) (allows injunctive/declaratory relief to prevent wrongful foreclosure)
- Leavings v. Mills, 175 S.W.3d 301 (Tex.App.-Houston [1st Dist.] 2004) (standing to challenge chain of title; unbroken chain required to foreclose)