Reinagel v. Deutsche Bank National Trust Co.
722 F.3d 700
5th Cir.2013Background
- Dia and Joseph Reinagel refinanced their Helotes, Texas home in May 2006; Argent originated the $360,000 loan and later conveyed the loan into a Deutsche Bank securitization trust.
- The Pooling and Servicing Agreement (PSA) for the trust barred transfers into the trust after October 1, 2006, but recorded assignments to Deutsche Bank were dated January 23, 2008 (assignment of the deed of trust only) and February 13, 2009 (assignment of deed of trust and note).
- The Reinagels defaulted; Deutsche Bank sought foreclosure and obtained a state-court order; the Reinagels obtained a temporary injunction and sued in state court alleging the assignments were “robo-signed,” forged, and violated the PSA.
- Deutsche Bank removed the case to federal court and moved to dismiss, arguing the Reinagels (non-parties to the assignments and PSA) lacked standing to challenge assignments and that robo-signing claims don’t invalidate assignments.
- The district court granted Deutsche Bank’s motion to dismiss; the Fifth Circuit affirmed, holding homeowners can challenge assignments that are void but not assignments that are merely voidable, and that the Reinagels’ allegations failed to show the assignments were void.
Issues
| Issue | Reinagels' Argument | Deutsche Bank's Argument | Held |
|---|---|---|---|
| Standing to attack assignments | Reinagels can challenge chain of title and assert assignments are void (fraud/robo-signing/forgery) | Non-parties to an assignment lack standing to challenge it; only assignor can void it | A non-party may defend on grounds that render an assignment void (not merely voidable); here Reinagels lacked such a showing, so dismissal affirmed |
| Validity of first assignment (deed of trust only) | First assignment was invalid because executed by an employee of a different company (re robo-signing) | Assignment facially valid; under Restatement note follows mortgage so assignment of mortgage conveys note | Court found no factual basis to infer lack of authority; first assignment valid; under the Restatement presumption the first assignment sufficed to foreclose (but not necessary to decide definitively) |
| Validity of second assignment (note and deed) | Second assignment void due to Bly’s lack of authority, scanned signature, and defective notarization (forgery) | Bly’s purported lack of officer status makes contract voidable (not void); scanned/typed signatures and acknowledgments acceptable if authorized; defects affect recording notice only | Bly’s authority, even if lacking, makes assignment voidable only (relief lies to defrauded principal), and alleged scanning did not allege forgery without unauthorized signature; second assignment valid as against Reinagels |
| Enforceability of PSA by homeowners | PSA violations make assignments void and prevent foreclosure; Reinagels claim third-party beneficiary status | Reinagels are not parties and lack status to enforce PSA; even if PSA breached, remedy is contract claim by intended beneficiaries | Reinagels not shown to be intended third-party beneficiaries; PSA breach would not void assignments but permit breach-of-contract claim by beneficiaries; PSA claim fails here |
Key Cases Cited
- Nobles v. Marcus, 533 S.W.2d 923 (Tex. 1976) (a contract executed by one purporting to be a corporate officer is prima facie valid and is voidable by the defrauded principal, not void as to third parties)
- Carpenter v. Longan, 83 U.S. 271 (U.S. 1872) (classic rule that assignment of the note carries the mortgage; assignment of mortgage alone is generally insufficient)
- Tri-Cities Const., Inc. v. Am. Nat. Ins. Co., 523 S.W.2d 426 (Tex. Ct. App. 1975) (obligor may assert defenses that render an assignment void, but not defenses that render it merely voidable)
- Cadle Co. v. Regency Homes, Inc., 21 S.W.3d 670 (Tex. Ct. App. 2000) (Texas decisions treating mortgage and note relationship and requirements to enforce promissory note)
- Kirby Lumber Corp. v. Williams, 230 F.2d 330 (5th Cir. 1956) (applying Texas law that the note and mortgage are inseparable; assignment of note carries mortgage)