Reinagel v. Deutsche Bank National Trust Co.
735 F.3d 220
| 5th Cir. | 2013Background
- Dia and Joseph Reinagel refinanced their Helotes, Texas home in May 2006; Argent originated the $360,000 loan, which was later pooled for a securitization governed by a PSA that barred transfers into the trust after Oct. 1, 2006.
- Assignments to Deutsche Bank were recorded Jan. 23, 2008 (assigning the deed of trust) and Feb. 13, 2009 (assigning deed of trust and the note); plaintiffs alleged both were "robo-signed" or forged.
- Reinagels defaulted; Deutsche Bank sought judicial foreclosure and removed the homeowners’ suit challenging Deutsche Bank’s standing to federal court on diversity grounds.
- Reinagels argued the assignments were void (robo-signing/forgery) and that transfers violated the PSA; Deutsche Bank moved to dismiss, contending the homeowners lacked standing to challenge assignments and could not enforce the PSA.
- The district court granted dismissal; the Fifth Circuit affirmed, holding (narrowly) that facially valid assignments cannot be attacked by the obligor on grounds that render them merely voidable, and that the pleadings did not establish a void assignment.
Issues
| Issue | Reinagels' Argument | Deutsche Bank's Argument | Held |
|---|---|---|---|
| Standing to challenge assignments | Reinagels can challenge assignments as void (fraud/robo-signing) that defeat Deutsche Bank’s foreclosure authority | Non-parties to an assignment lack standing to challenge the assignment; only assignor may void it | Homeowners may challenge assignments that are void (not merely voidable); here allegations did not show assignments were void |
| Effect of first assignment (deed-only) for foreclosure authority | First assignment (deed) is insufficient unless note also assigned; plaintiffs questioned chain | Assignment of mortgage presumptively includes note under Restatement; first assignment could suffice | Court applied Restatement presumption (note follows mortgage) but avoided deciding Texas adoption because the second assignment (note included) was valid against Reinagels |
| Alleged lack of agent authority / "robo-signing" | Reynolds and Bly lacked actual authority or engaged in forgery/scanned signatures; thus assignments void | Even if agent lacked authority, such defects render assignments voidable, not void; obligors cannot assert voidable defects | Agent-authority allegations, accepted as true, showed at most voidable transactions—insufficient for obligor defense; claim failed |
| PSA violation (transfer after cutoff) | PSA prohibition renders assignments void and prevents Deutsche Bank from foreclosing | Reinagels are not parties/third-party beneficiaries to the PSA and may not enforce it | Plaintiffs are not shown to be intended third-party beneficiaries; PSA breach would create a breach action for beneficiaries, not void the assignments as to obligors |
Key Cases Cited
- Nobles v. Marcus, 533 S.W.2d 923 (Tex. 1976) (a deed or instrument executed by one fraudulently purporting to be an officer is voidable and prima facie evidence of title until set aside by the defrauded principal)
- Tri-Cities Constr., Inc. v. Am. Nat. Ins. Co., 523 S.W.2d 426 (Tex. Ct. App. 1975) (an obligor may assert defenses that render an assignment void, but not those that make it merely voidable)
- Carpenter v. Longan, 83 U.S. 271 (U.S. 1872) (classic statement that assignment of the mortgage alone is a nullity because the note and mortgage are inseparable) [discussed in concurrence]
- Cadle Co. v. Regency Homes, Inc., 21 S.W.3d 670 (Tex. Ct. App. 2000) (to collect on a promissory note a plaintiff must show existence of the note, defendant’s signature, plaintiff’s ownership/holder status, and balance due)