Jatera Corp. v. US Bank National Association, 030619 FED5, 18-10248

Docket Nº:18-10248
Opinion Judge:RHESA HAWKINS BARKSDALE, CIRCUIT JUDGE:
Party Name:JATERA CORPORATION; ESTHER RANDLE MOORE, Plaintiffs - Appellants v. US BANK NATIONAL ASSOCIATION, As Trustee, in Trust for the Registered Holders of Citigroup Mortgage Loan Trust, Asset-Backed Pass-Through Certificates, Series 2005-HE3; SELECT PORTFOLIO SERVICING, INCORPORATED, Defendants - Appellees
Judge Panel:Before SMITH, BARKSDALE, and HO, Circuit Judges.
Case Date:March 06, 2019
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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JATERA CORPORATION; ESTHER RANDLE MOORE, Plaintiffs - Appellants

v.

US BANK NATIONAL ASSOCIATION, As Trustee, in Trust for the Registered Holders of Citigroup Mortgage Loan Trust, Asset-Backed Pass-Through Certificates, Series 2005-HE3; SELECT PORTFOLIO SERVICING, INCORPORATED, Defendants - Appellees

No. 18-10248

United States Court of Appeals, Fifth Circuit

March 6, 2019

Appeal from the United States District Court for the Northern District of Texas

Before SMITH, BARKSDALE, and HO, Circuit Judges.

RHESA HAWKINS BARKSDALE, CIRCUIT JUDGE:

At issue in this diversity action is whether Texas law provides a detrimental-reliance exception to a lender's right to unilaterally withdraw a notice of acceleration; and, if so, whether Jatera Corporation and Esther Randle Moore detrimentally relied on the notice of acceleration by U.S. Bank National Association (Bank) and Select Portfolio Servicing, Inc. (SPS). Appellants challenge the district court's, on cross-motions for summary judgment, denying Appellants' motion and granting Appellees'. AFFIRMED.

I.

In 2005, Moore and her husband purchased a house located in Dallas, Texas (the property), by signing a Texas home equity fixed/adjustable rate note in the amount of $99, 200, secured by a Texas home equity security instrument. Through a series of transfers and assignments, the Bank became the owner and holder of the note and security interest.

After her husband died in April 2008, all interest in the property was transferred to Moore, who soon defaulted on her mortgage payments. In March 2010, the Bank's then loan servicer notified Moore of its intent to accelerate the note (acceleration notice), demanding full payment of the debt ($116, 575.80).

After the Bank filed suit in state court in 2011 to obtain a court order permitting foreclosure on the property, Moore signed an agreed final judgment in November 2011, consenting to foreclosure. In January 2012, Moore vacated the property and signed a one-year lease for an apartment.

The Bank's new loan servicer, SPS, sent a new notice of default to Moore in November 2012, informing her: she could cure her default by making a payment of $38, 343.99; but, if payment was not received by December 2012, the note would be re-accelerated.

In March 2015, Moore conveyed her interest in the property to Scojo Solutions, LLC, through a special warranty deed. One month later, Scojo transferred its interest in the property to Jatera Corporation.

After SPS re-initiated the foreclosure proceedings originally pursued by the Bank, Jatera filed this action against the Bank and SPS in state court, seeking a judgment declaring the lien on the property void because Appellees failed to initiate foreclosure proceedings within the four-year statute of limitations. In response, Appellees removed this action to federal court on the basis of diversity jurisdiction.

In district court, Jatera amended its complaint, asserting that Moore's detrimental reliance on the acceleration notice prevented Appellees from abandoning the acceleration in November 2012. Moore was joined as a plaintiff. She filed a complaint seeking a judgment declaring the lien on the property void, and/or quieting title in Jatera's name (also on grounds of her detrimental reliance).

The parties filed cross-motions for summary judgment on all claims. Regarding Moore's claims, the district court held Moore no longer retained an interest in the property, and, therefore, lacked standing. Concerning Jatera's claims, the court noted the uncertainty surrounding the detrimental-reliance exception under Texas law, but held that, in any event, detrimental reliance runs to the benefit of the party asserting it, and Jatera had failed to show it detrimentally relied on the acceleration notice. Accordingly, the court denied Appellants' motion and granted Appellees'.

II.

Appellants contend the district court erred in denying their summary-judgment motion and in granting Appellees'. Accordingly, Appellants request judgment's being rendered in their favor; alternatively, that this case be remanded to district court.

The district court's "grant[] and denial[] of summary judgment [is reviewed] de novo". Century Surety Co. v. Seidel, 893 F.3d 328, 332 (5th Cir. 2018) (quotations and citation omitted). Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law". Fed.R.Civ.P. 56(a). "A genuine dispute of material fact exists if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. However, [a] mere scintilla of evidence will not preclude granting of a motion for summary judgment." Bitterroot Holdings, L.L.C. v. MTGLQ Inv'rs, L.P., 648 Fed.Appx. 414, 417 (5th Cir. 2016) (alteration in original) (internal quotations and citations omitted).

"When parties file cross-motions for summary judgment, we review each party's motion independently, viewing the evidence and inferences in the light most favorable to the nonmoving party." Cooley v. Hous. Auth. of Slidell, 747 F.3d 295, 298 (5th Cir. 2014) (internal quotations and citation omitted).

A.

Texas substantive law applies to this diversity-jurisdiction case. Erie R.R. v. Tompkins, 304 U.S. 64, 78-79 (1938). In instances where the State's highest court has not spoken on the direct question, federal courts are required to make an "Erie guess and determine, in [their]...

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