Thompson v. Deutsche Bank Nat'l Trust Co.
| Decision Date | 29 December 2014 |
| Docket Number | No. 14–10084.,14–10084. |
| Citation | 775 F.3d 298 |
| Parties | John THOMPSON; Ivy Thompson, Plaintiffs–Appellants v. DEUTSCHE BANK NATIONAL TRUST COMPANY, Defendant–Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Michael E. Hassett, Jones Hassett, P.C., Arlington, TX, for Plaintiffs–Appellants.
William Scott Hastings, Esq., Thomas F. Loose, Esq., Senior Litigation Attorney, Jeffrey B. Mead, Robert Thompson Mowrey, Jason Levi Sanders, Esq., Attorney, Locke Lord, L.L.P., Dallas, TX, for Defendant–Appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before JOLLY and COSTA, Circuit Judges, and ROSENTHAL* , District Judge.
John and Ivy Thompson appeal the district court's judgment in favor of Bank National Trust Company. The Thompsons brought this action in Texas state court under Section 50 of Article XVI of the Texas Constitution (“Section 50”), challenging the adequacy of a loan that they obtained in 2006. Although Deutsche was never properly served, the state court nonetheless granted the Thompsons a default judgment against Deutsche. Upon learning of the lawsuit, Deutsche removed the case, moved to set aside the state court default judgment, and subsequently moved for dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The Thompsons moved for remand to state court, arguing that Deutsche's potential relief from the state court judgment lies in state court, not federal court. The district court sided with Deutsche and ultimately dismissed the Thompsons' claims as barred by the statute of limitations.
To resolve this appeal, we must first determine whether the district court correctly vacated the state court judgment upon concluding that removal to federal court was proper and, relatedly, that the state court judgment was void. If we agree with the district court, we must then assess whether the district court correctly dismissed the complaint because the statute of limitations had run. Based on our review of the record and our consideration of the arguments of the parties, we AFFIRM the district court in all respects.
The Thompsons purchased a piece of real property in August 1996, and they executed a promissory note and deed of trust in favor of Option One Mortgage Company. In 2002, they executed a renewal and extension agreement and executed a promissory note and deed of trust in favor of Fremont Investment and Loan.
This appeal arises from a March 14, 2006, renewal and extension to the loan agreement. On that date, the Thompsons again entered into a renewal and extension, this time with New Century Mortgage Corporation. As part of this agreement, the Fremont lien was paid off along with a $9,000 second lien Texas home equity loan in favor of Bank of America.1 The Thompsons executed a promissory note and deed of trust in favor of New Century, and America's Servicing Company (“ASC”), a subsidiary of Wells Fargo Bank, N.A., serviced the loan.
According to the Thompsons, the renewal was closed using conventional loan documentation, which was inappropriate because this loan paid off the Bank of America home equity loan, thereby making the New Century loan a home equity loan as well. Due to this error, the Thompsons claim that they can no longer refinance this renewal at the market rate, and the loan does not satisfy the requirements of Section 50.
The Thompsons notified New Century and ASC about these problems on November 8, 2011. They subsequently learned that their loan had been transferred to Deutsche. Jonathan Finke, counsel for the Thompsons, sent Deutsche a copy of the letter to New Century identifying their issues with the loan, on January 19, 2012.2 Notably, Finke mailed the letter to Deutsche's address at “1761 East Saint Andrew Place, Santa Ana, California, 92705–4934.” The record now establishes that this California address is Deutsche's principal business office for purposes of receiving service of process. It does not appear that Deutsche responded to this letter, but ASC submitted a letter denying liability, which prompted the Thompsons to file suit.
Thus, the Thompsons initiated this lawsuit in state court in Tarrant County, Texas, on April 9, 2012. Their petition alleged that both Deutsche and ASC violated Section 50. After filing the petition, they served ASC, but they never served Deutsche. Instead, they embarked on several unsuccessful attempts.
In their petition, the Thompsons alleged that Deutsche was a foreign corporation that could be served by the Texas Secretary of State. They provided the Secretary of State with a North Carolina address, however, and they received notice on April 24, 2012, that the petition was not deliverable to that address. Next, the Thompsons' counsel sought to serve Deutsche through CT Corporation System, claiming that CT was Deutsche's agent in Texas. CT sent a letter to the Thompsons' counsel indicating that it was not Deutsche's agent.3 Thus, the Thompsons' counsel was aware that he had not actually served Deutsche.
Nonetheless, the Thompsons moved for a default judgment against Deutsche in state court on June 11, 2012.4 As Deutsche points out, the Thompsons included an exhibit indicating that the petition had been mailed to CT, thus suggesting that Deutsche was properly served. The state court entered a default judgment against Deutsche on June 22, 2012. The clerk of court submitted a notice of default to CT, which it returned to the court. At that time, the default was a partial judgment, as ACS remained in the action.
On August 31, 2012, the Thompsons filed a notice of non-suit as to ASC that was stamped as filed in the state court on September 4, 2012. The state court judge granted the nonsuit as to ASC on September 4, 2012, and ordered “that the interlocutory default judgment entered against [Deutsche] on June 22, 2012, became final upon the filing of Plaintiffs' notice of nonsuit on August 31, 2012.”
Deutsche apparently learned of the judgment for the first time on December 27, 2012, when an attorney forwarded correspondence regarding the judgment to Deutsche. On January 17, 2013, Deutsche removed the action to federal court. In federal court, the Thompsons filed a motion to remand, and Deutsche filed a motion for relief from the default judgment under Federal Rule of Civil Procedure 60. The district court denied the Thompsons' motion and granted Deutsche's motion. Thereafter, Deutsche filed a motion to dismiss on the ground that the Thompsons' claims are barred by the applicable statute of limitations. The district court granted the motion to dismiss, and the Thompsons filed a timely appeal.
We review each of the issues presented in this appeal de novo. First, we review whether the district court had subject matter jurisdiction over the action and, relatedly, whether it properly vacated the default judgment against Deutsche under Rule 60(b)(4). See McLaurin v. United States, 392 F.3d 774, 777 (5th Cir.2004) (); see also Recreational Props., Inc. v. Sw. Mortg. Serv. Corp., 804 F.2d 311, 314 (5th Cir.1986) ().
Upon concluding that the district court had jurisdiction and that it properly set aside the default judgment, we then review the district court's grant of Deutsche's Rule 12(b)(6) motion to dismiss de novo. Thompson v. City of Waco, Tex., 764 F.3d 500, 502 (5th Cir.2014). Although Deutsche premises its motion on the statute of limitations, which is usually pled as an affirmative defense, “[a] statute of limitations may support dismissal under Rule 12(b)(6) where it is evident from the plaintiff's pleadings that the action is barred and the pleadings fail to raise some basis for tolling or the like.” Jones v. Alcoa, Inc., 339 F.3d 359, 366 (5th Cir.2003).
The Thompsons argue that the district court erred in denying their motion to remand and vacating the judgment against Deutsche because, the Thompsons urge, the case was not properly removable. We begin with a discussion of the relevant law, apply the law of removal to this case, and conclude by holding that the default judgment was properly vacated.
The federal courts' removal jurisdiction flows from Congress's statutory grant, which provides:
Id. § 1446(b)(1). Additionally, a defendant may remove a case that is not initially removable within 30 days of receipt through service of a copy of the pleading indicating that the case has become removable. Id. § 1446(b)(3). Finally, Congress established an additional limitation in cases where removal is based on diversity of citizenship under 28 U.S.C. § 1332, as such actions may not be removed “more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” Id. § 1446(c).
These statutes clearly provide that a defendant's right to...
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Theller v. US Bank N.A.
...served,defendant's option to remove would remain because the time limit for removal never commenced. See Thompson v. Deutsche Bank Nat'l Tr. Co., 775 F.3d 298, 306 (5th Cir. 2014) ("[W]e conclude that [defendant's] removal period did not begin to run . . . because it was never properly serv......