Regina Foster v. Deutsche Bank Natl Trust Co., et
2017 U.S. App. LEXIS 2273
5th Cir.2017Background
- In 2004 Carlos Foster executed the promissory note and a deed of trust on a Grand Prairie, TX house; Regina Foster was a co-borrower on the deed but not on the note.
- Carlos defaulted; in 2014 Power Default (substitute trustee) issued a Notice of Substitute Trustee Sale listing Ocwen as servicer and Deutsche Bank as mortgagee, scheduling a sale for May 6, 2014.
- Regina filed suit in Texas state court on May 5, 2014 seeking to enjoin foreclosure, alleging improper notice and lack of opportunity to cure; the state court issued a temporary restraining order halting the sale.
- Deutsche Bank and Ocwen removed the case to federal court on diversity grounds; they argued Power Default (a Texas citizen) was improperly joined. The district court agreed, dismissed claims against Power Default, and retained jurisdiction.
- The district court later granted summary judgment for Deutsche Bank and Ocwen, dismissing claims for attempted wrongful foreclosure, violation of Tex. Prop. Code §51.002(b), invalid lien, permanent injunction, and reformation because no foreclosure occurred and Foster suffered no cognizable injury.
- Foster’s motions for reconsideration and referral to bankruptcy court were denied; she appealed and the Fifth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Power Default was properly joined (remand issue) | Foster argued she had a viable claim against the substitute trustee and thus Power Default was a proper diverse-defeating defendant | Defendants argued Power Default was improperly joined because no actionable claim lay against it absent an actual foreclosure | Joinder was improper; removal was proper and dismissal of Power Default was affirmed |
| Whether a wrongful-foreclosure claim exists absent an actual foreclosure | Foster contended attempted/wrongful foreclosure claim and damages exist even though sale did not occur | Defendants argued Texas law does not recognize wrongful-foreclosure claims when the plaintiff retained possession and no foreclosure sale occurred | Court held wrongful-foreclosure/attempt claims fail when no foreclosure occurred; summary judgment for defendants affirmed |
| Whether statutory notice claim under Tex. Prop. Code §51.002(b) survives | Foster claimed defective notice entitled her to relief | Defendants argued no foreclosure occurred and Foster suffered no injury from any notice defect | Court found no need to reach a substantive §51.002 ruling because absence of foreclosure foreclosed relief; summary judgment stands |
| Whether reformation or injunctive relief was warranted | Foster sought reformation of the deed and permanent injunction based on claimed defects and threat of foreclosure | Defendants argued no legal basis for reformation or injunction because Foster showed no harm or necessity and sale never occurred | Court denied reformation and permanent injunction for failure to show necessity or harm |
Key Cases Cited
- Allen v. R&H Oil & Gas Co., 63 F.3d 1326 (5th Cir.) (standard for reviewing remand)
- LeMaire v. Louisiana Dep’t of Transp. & Dev., 480 F.3d 383 (5th Cir.) (standard for reviewing summary judgment)
- Smallwood v. Ill. Cent. R. Co., 385 F.3d 568 (5th Cir.) (improper joinder doctrine)
- Hammonds v. Holmes, 559 S.W.2d 345 (Tex.) (trustee must act with impartiality and fairness)
- Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135 (Tex. App.) (elements of wrongful foreclosure claim)
- Motten v. Chase Home Fin., 831 F. Supp. 2d 988 (S.D. Tex.) (no wrongful-foreclosure recovery where plaintiff never lost possession)