Articles Posted in U.S. Court of Appeals for the Fifth Circuit

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The lender, Ocwen Loan Servicing, filed suit against the borrower. The borrower asserted affirmative defenses and a counterclaim alleging numerous violations of the Texas Constitution's home equity loan provisions. The district court granted summary judgment for the lender. The court concluded that the district court erred in finding that the borrower's affirmative defenses and counterclaims alleging violations of section 50(a)(6) of the Texas Constitution were barred by a four-year statute of limitations. The court explained that it must follow the Texas Supreme Court's recent holding in Wood v. HSBC Bank USA, N.A. that no statute of limitations applies to a borrower's allegations of violations of section 50(a)(6) of the Texas Constitution in a quiet title action, rather than the court's prior holding in Priester v. JP Morgan Chase Bank, N.A. The court reasoned that, although Wood concerned a borrower's quiet title action, Ocwen has not argued that Wood's statute of limitations holding should not be applied to the borrower's arguments simply because they were asserted as affirmative defenses and as a counterclaim. Accordingly, the court vacated and remanded. View "Ocwen Loan Servicing, LLC v. Berry" on Justia Law

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Twelve individuals in the Houston area who receive Section 8 housing assistance filed suit against AmeriPro and Wells Fargo, alleging discrimination in violation of the Equal Credit Opportunity Act (ECOA), 15 U.S.C. 1691 et seq., on the basis of their receipt of public assistance income. The district court granted defendants' Rule 12(b)(6) motion and dismissed the claims. The court concluded that the Wells Fargo Applicants did not plausibly allege that Wells Fargo discriminated against them on the basis of their Section 8 income or failed to consider their Section 8 income in assessing their creditworthiness; the AmeriPro Inquirers did not plausibly allege that they are "applicants" under the ECOA because they did not actually apply for credit with AmeriPro; and the AmeriPro Applicants did not plausibly allege that Wells Fargo was a "creditor" with respect to them. Therefore, the court affirmed as to these claims. The court concluded that the AmeriPro Applicants did plausibly allege violations of the ECOA by alleging that AmeriPro refused to consider their Section 8 income in assessing their creditworthiness as mortgage applicants, and that they received mortgages on less favorable terms and in lesser amounts than they would have had their Section 8 income been considered. Accordingly, the court reversed as to these claims and remanded for further proceedings. View "Alexander v. Ameripro Funding" on Justia Law

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This appeal involves the Bank, Ocwen, and Power Default's attempt to foreclose on property in Grand Prairie, Texas. On appeal, plaintiff challenged the district court's denial of her motion for remand based on its finding that Power Default, a non-diverse defendant and substitute trustee for the attempted foreclosure, was improperly joined in the proceeding because the foreclosure did not take place. The district court concluded that plaintiff had no wrongful foreclosure claim against Power Default absent an actual foreclosure. In this case, because she would have been unable to assert a cause of action against Power Default in state court, the district court found that joinder of Power Default as a defendant was improper. Therefore, the court agreed with the district court's analysis and conclusion denying plaintiff's motion to remand to state court. The court also agreed with the district court's grant of summary judgment to defendants, concluding that plaintiff may not assert a cause of action for wrongful foreclosure. Accordingly, the court affirmed the judgment. View "Foster v. Deutsche Bank National Trust Co." on Justia Law

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The D’Oench, Duhme doctrine, which originated in the federal common law and is now codified at 12 U.S.C. 1823(e), prevents borrowers from relying on oral agreements they allegedly had with a failed bank to defend against collection efforts of a federal receiver like the FDIC. In this case, plaintiffs filed suit against Heritage for beach of contract and fraudulent inducement after Heritage foreclosed on plaintiffs' properties. While the suit was pending, Heritage was declared insolvent and the FDIC was appointed as receiver. That same day, the FDIC entered into a Purchase and Assumption Agreement with Trustmark, under which it transferred to Trustmark various Heritage assets and liabilities, including plaintiffs' notes and guaranties. The district court subsequently granted the FDIC's motion to dismiss. Trustmark then pleaded 1823(e) as a defense and filed counterclaims against plaintiffs for the amount still owing on the notes. The district court granted Trustmark's motion for summary judgment. The court rejected plaintiff's waiver arguments, concluding that nothing about Trustmark's agreement with the FDIC expressly or impliedly indicates a voluntary or intentional surrender by Trustmark of the section 1823(e) defense it inherited from the FDIC. The court also rejected plaintiffs' assertion that Trustmark waived this defense by raising it in a dilatory manner. Finally, even viewing an executive’s testimony about the purported side agreement in favor of plaintiffs, there is no evidence from which a jury might conclude that all of the conditions necessary to overcome section 1823(e) are present. Accordingly, the court affirmed the judgment. View "C&C Inv. Prop. v. Trustmark Nat'l Bank" on Justia Law

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LSR appealed the district court's grant of summary judgment denying its wrongful-foreclosure claims and award of attorneys' fees to Wells Fargo. The court concluded that Wells Fargo is entitled to summary judgment on the wrongful-foreclosure claim because LSR cannot establish an essential element. Under Texas law, a party alleging wrongful foreclosure must prove a defect in the foreclosure-sale proceedings. In this case, the court concluded that there is no genuine dispute as to whether Wells Fargo mailed notices of intent to accelerate. The court also concluded that the district court did not abuse its discretion in finding that LSR brought its Fair Debt Collections Practices Act (FDCPA), 15 U.S.C. 1692g, claim in bad faith and for the purpose of harassment. Accordingly, the court affirmed the judgment. View "LSR Consulting v. Wells Fargo Bank" on Justia Law

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Plaintiff filed suit against WAF and RMS, alleging breach of a reverse mortgage agreement and fraudulent inducement. Plaintiff primarily argued that the property’s foreclosure could have been avoided if WAF had not issued a Home Equity Conversion Mortgage (a HECM) in violation of the United States Housing and Urban Development (HUD) guidelines. The court held that HUD regulations govern the relationship between the reverse-mortgage lender and HUD as insurer of the loan. HUD regulations do not give the borrower a private cause of action unless the regulations are expressly incorporated into the lender-borrower agreement. The court affirmed the district court's summary judgment dismissal, holding that plaintiff cannot assert a claim against defendants for breach of HUD regulations, there was no breach of contract, and no valid fraudulent inducement claim. View "Johnson v. World Alliance Fin. Corp." on Justia Law

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Plaintiff, daughter of Martin Schmidt, filed suit against Wells Fargo in Texas state court for negligence, promissory estoppel, and conversion. After removal to federal court, the district court granted summary judgment based on California Probate Code 13106(a), which discharges the holder of funds “from any further liability with respect to the money or property” upon receipt of an affidavit conforming to certain statutory requirements. The court concluded that, because plaintiff has failed to probate her father’s will, the only statutory claim that she may possibly have is under California’s laws of intestate succession, which give a decedent’s surviving children a share in the estate not passing to the decedent’s surviving spouse. A claim under the laws of intestacy, however, is inferior to a claim under the laws of testate succession, and it is questionable whether a claim to a percentage of an estate equates to a claim to specific assets in the estate, like the Wells Fargo bank accounts at issue here. The court also noted that plaintiff has waived any argument based on intestate succession by failing to raise the issue in the district court or in her briefs on appeal. Therefore, the court held that it is immaterial that plaintiff gave Wells Fargo actual notice or whether she reasonably and detrimentally relied on any representation by Wells Fargo’s Houston employees. The California legislative scheme grants Wells Fargo immunity from any injury that plaintiff may have suffered from the disbursement of funds to her stepmother. Accordingly, the court affirmed the judgment. View "Di Angelo v. Wells Fargo" on Justia Law

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After David Walker received a loan from Guaranty to produce his crops of soybeans and corn, Guaranty took a production-money security interest in Walker’s crops, and Walker later delivered these crops to Agrex d/b/a FGDI under a series of contracts. Because Walker failed to fulfill all of his contracts with FGDI, FGDI applied a set-off to the amount it owed Walker for his crops in order to cover its losses arising from the undelivered crops. Guaranty filed suit against FGDI seeking to recover the entire amount due Walker under his contracts with FGDI. The district court granted summary judgment to Guaranty. The court affirmed the judgment because FGDI took Walker’s crops subject to Guaranty’s security interest under the Food Security Act of 1985, 7 U.S.C. 1621, 1631. View "Guaranty Bank & Trust Co. v. Agrex, Inc." on Justia Law

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In this declaratory judgment action, at issue is which party, either Prospect or Mutual Bank, had priority under Texas law in certain collateral. Prospect obtained a money judgment for approximately $2.3 million against Michael Enmon in federal court in New York. To avoid paying the judgment, Enmon engaged in a series of fraudulent transfers of his assets. The district court granted summary judgment for Mutual Bank and Prospect appealed, arguing that, under Texas’s law of title disputes, it was entitled to a declaratory judgment that it had priority over Mutual in the contested collateral. The court concluded that Prospect’s unabstracted and unexecuted money judgment did not give it a lien interest in any of the specific contested collateral. Hence the doctrine does not apply. Furthermore, Prospect has not shown that the district court abused its discretion in denying Prospect’s request for Fed.R.Civ.P. 56(d) relief. Accordingly, the court affirmed the judgment. View "Prospect Capital Corp. v. Mutual of Omaha of Omaha" on Justia Law

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In this declaratory judgment action, at issue is which party, either Prospect or Mutual Bank, had priority under Texas law in certain collateral. Prospect obtained a money judgment for approximately $2.3 million against Michael Enmon in federal court in New York. To avoid paying the judgment, Enmon engaged in a series of fraudulent transfers of his assets. The district court granted summary judgment for Mutual Bank and Prospect appealed, arguing that, under Texas’s law of title disputes, it was entitled to a declaratory judgment that it had priority over Mutual in the contested collateral. The court concluded that Prospect’s unabstracted and unexecuted money judgment did not give it a lien interest in any of the specific contested collateral. Hence the doctrine does not apply. Furthermore, Prospect has not shown that the district court abused its discretion in denying Prospect’s request for Fed.R.Civ.P. 56(d) relief. Accordingly, the court affirmed the judgment. View "Prospect Capital Corp. v. Mutual of Omaha of Omaha" on Justia Law