IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-50281

Summary Calendar

DUNG QUE TRANG, 

 Plaintiff - Appellant

v.

TAYLOR BEAN & WHITAKER MORTGAGE CORPORATION; U.S. BANK 

NATIONAL ASSOCIATION; BARRETT DAFFIN FRAPPIER TURNER &

ENGEL, L.L.P., 

 Defendants - Appellees

Appeal from the United States District Court

for the Western District of Texas

USDC No. 1:13-CV-44

Before KING, JOLLY, and HAYNES, Circuit Judges.

PER CURIAM:*

This appeal arising out of a state-law foreclosure dispute requires us to 

answer two questions of procedure. First, Dung Que Trang, the borrower, 

asserts that the district court should have remanded her suit because of the 

presence of Barrett Daffin Frappier Turner & Engel, L.L.P. (“Barrett Daffin”), 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

January 7, 2015

Lyle W. Cayce

Clerk

 

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a non-diverse defendant. Second, Trang asserts that because another 

defendant, Taylor Bean & Whitaker (“TBW”), never appeared in the case, the 

district court should have entered a default judgment against it. We reject 

both assertions, however, because Trang failed to state a claim against either 

defendant. We therefore AFFIRM the judgment of the district court.

I.

In 2008, Dung Que Trang obtained a loan from TBW to purchase 

property in Pflugerville, Texas. The Deed of Trust executed to secure the loan 

named Mortgage Electronic Registration Systems, Inc. (“MERS”) as 

beneficiary and nominee for TBW, and gave MERS the “right to exercise any 

or all of those interests [granted by Borrower] including, but not limited to, the 

right to foreclose and sell the Property and to take any action required of 

Lender.” TBW declared bankruptcy in 2009, and, in the course of its 

bankruptcy proceedings, rejected its executory contracts. In 2011, MERS 

assigned the Deed of Trust to U.S. Bank. Trang later defaulted, prompting 

U.S. Bank, along with its counsel Barrett Daffin, to initiate foreclosure 

proceedings on the property. Trang then sued U.S. Bank, Barrett Daffin, and 

TBW in state court, alleging a host of state-law claims founded on the notion 

that, because of TBW’s bankruptcy, MERS’s assignment of the Deed of Trust 

to U.S. Bank was invalid.

Asserting diversity jurisdiction, U.S. Bank removed the suit to the 

district court. Trang moved to remand, arguing that Barrett Daffin was, like 

Trang, a Texas citizen, and so its presence in the suit precluded the district 

court from exercising diversity jurisdiction. The district court denied Trang’s 

motion, however, on the ground that Barrett Daffin had been improperly 

joined. It then granted motions to dismiss filed by U.S. Bank and Barrett 

Daffin. Trang filed a motion for default judgment against TBW, who had not 

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appeared in the suit. The district court denied this motion and entered a final 

judgment against Trang.

On appeal, Trang challenges (1) the district court’s denial of her motion 

to remand; and (2) the district court’s denial of her motion for default judgment 

against TBW. We review the district court’s denial of a motion to remand de 

novo, Clayton v. ConocoPhillips Co., 722 F.3d 279, 290 (5th Cir. 2013), and its

denial of a motion for default judgment for abuse of discretion. Lewis v. Lynn, 

236 F.3d 766, 767 (5th Cir. 2001). 

II.

A.

We consider first the district court’s denial of Trang’s motion to remand. 

When federal jurisdiction is based on diversity, a motion to remand should be 

granted if any “properly joined” defendant resides in the same state as the 

plaintiff. B., Inc. v. Miller Brewing Co., 663 F.2d 545, 550 (5th Cir. 1981); see

28 U.S.C. § 1332. A non-diverse defendant is improperly joined if “there is no 

reasonable basis for the district court to predict that the plaintiff might be able 

to recover against” that defendant. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 

568, 573 (5th Cir. 2004) (en banc). To determine whether there is a reasonable 

basis to predict that the plaintiff might be able to recover against a non-diverse

defendant, “[t]he court may conduct a Rule 12(b)(6)-type analysis, looking 

initially at the allegations of the complaint to determine whether the complaint 

states a claim under state law against” the non-diverse defendant. Id. Here, 

Trang seeks recovery against the non-diverse defendant, Barrett Daffin, under 

§ 12.002 of the Texas Civil Practices and Remedies Code. Thus, the critical 

question is whether Trang’s allegations “contain sufficient factual matter, 

accepted as true, to ‘state a claim to relief’” under § 12.002 “‘that is plausible 

on its face.’” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2006)).

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They do not. The elements of a claim under § 12.002(a) are 

that the defendant (1) made, presented, or used a document with 

knowledge that it was a “fraudulent lien or claim against real or 

personal property or an interest in real or personal property,” (2) 

intended that the document be given legal effect, and (3) intended 

to cause the plaintiff physical injury, financial injury, or mental 

anguish.

Henning v. OneWest Bank FSB, 405 S.W.3d 950, 964 (Tex. App. 2013) (quoting 

Tex. Civ. Prac. & Rem. Code § 12.002(a)). Trang’s allegations are insufficient 

as to the third element. Trang alleges no facts tending to show that Barrett 

Daffin acted with intent to cause her “financial injury” or “mental anguish,” 

rather than just “for business purposes.” See Golden v. Wells Fargo Bank, N.A., 

557 F. App’x 323, 327 (5th Cir. 2014). The allegation that might be construed 

as touching on § 12.002’s intent element is that “the transactions by the 

Defendants jointly and severally were designed to defraud the Plaintiff out of 

her property.” But this allegation is, at most, a legal conclusion that Barrett 

Daffin acted with the requisite intent; it lacks any “factual content” that would 

“allow[] the court to draw the reasonable inference” that the intent element 

was met. Iqbal, 556 U.S. at 678. The district court therefore held correctly

that Barrett Daffin was improperly joined and that Trang’s motion to remand 

should be denied.1

1 The defendants urge several alternative grounds on which we might affirm the 

district court’s denial of Trang’s motion to remand, including that an assignment of a lien is 

not a “lien or claim” that can support liability under § 12.002(a). Courts have split on this 

issue of statutory interpretation. Some appear to agree with the defendants. See, e.g., Bond 

v. Barrett Daffin Frappier Turner & Engel, L.L.P., C.A. NO. G-12-188, 2013 U.S. Dist. LEXIS 

55924, at *34–35 (S.D. Tex. Mar. 22, 2013); Perdomo v. Fed. Nat’l Mortg. Ass’n, Civil Action 

No. 3:11-cv-734-M, 2013 U.S. Dist. LEXIS 37139, at *17–19 (N.D. Tex. Mar. 18, 2013); Marsh 

v. JPMorgan Chase Bank, N.A., 888 F. Supp. 2d 805, 812–14 (W.D. Tex. Aug. 29, 2012). 

Others—including one Texas appellate court—appear to go the other way. See, e.g., Bernard 

v. Bank of Am., N.A., No. 04-12-00088-CV, 2013 Tex. App. LEXIS 1045, at 11–13 (Tex. App. 

Feb. 6, 2013); Kingman Holdings, LLC v. Citimortgage, Inc., CASE NO. 4:10-CV-619, 2011 

U.S. Dist. LEXIS 52770, at *13–14 (E.D. Tex. Apr. 21, 2011). We affirm on the ground stated 

in the text, and so we do not weigh in on this split of authority.

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B.

We turn next to the district court’s denial of Trang’s motion for default 

judgment against TBW. Generally, a defendant’s failure to appear is grounds 

for a default judgment. See Fed. R. Civ. P. 55(a). But a plaintiff “is not entitled 

to a default judgment as a matter of right, even where the defendant is 

technically in default.” Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). 

Instead, “[t]here must be a sufficient basis in the pleadings for the judgment 

entered.” Nishimatsu Constr. Co. v. Hous. Nat’l Bank, 515 F.2d 1200, 1206 

(5th Cir. 1975). Thus, TBW’s failure to appear should have resulted in a 

default judgment against it only if Trang’s factual allegations, taken as true, 

state a claim against TBW. See Lewis, 236 F.3d at 767.

Trang fails to state a claim against TBW. Trang’s claims against TBW

hinge on her allegation that the Deed of Trust is an executory contract that 

was rejected in TBW’s bankruptcy, see 11 U.S.C. § 365, and thus that MERS 

lacked authority to assign it. But even making the highly contestable 

assumption that the Deed of Trust was “executory” under the Bankruptcy 

Code,2 Trang mistakes the nature of rejection. Rejection of an executory 

contract “relates only to those aspects of the contract[] which remain 

unfulfilled” as of the bankruptcy filing, Stewart Title Guar. Co. v. Old Republic 

Nat’l Title Ins. Co., 83 F.3d 735, 741 (5th Cir. 1996) (internal quotation marks 

omitted); it “does not invalidate the contract, or treat the contract as if it did 

not exist.” In re Continental Airlines, 981 F.2d 1450, 1459 (5th Cir. 1993). 

MERS obtained its right to assign the Deed of Trust when the Deed of Trust 

was executed, in 2008. That right was independent of any unfulfilled 

obligations on the part of TBW. It therefore was not “undo[ne] or revers[ed]”

2 The district court rested its denial of Trang’s motion on the ground that the Deed of 

Trust was not executory. Because we hold that Trang does not state a claim against TBW 

even if the Deed of Trust is executory, we need not reach this question.

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by TBW’s rejection of its executory contracts in bankruptcy. Stewart Title, 83 

F.3d at 742 (internal quotation marks omitted); see also Khan v. Wells Fargo 

Bank, N.A., CIVIL ACTION NO. H-12-1116, 2014 U.S. Dist. LEXIS 6559, at 

*24 (S.D. Tex. Jan. 17, 2014) (“Rejection of executory contracts means that the 

debtor . . . need not continue to perform under the contract, but does not impact 

prior completed acts under the contract.”); In re Marron, 485 B.R. 485, 488–89 

(D. Mass. 2012) (“A lender’s bankruptcy does not affect the ability of MERS to 

assign a mortgage.”). Thus, the district court did not abuse its discretion in 

denying Trang’s motion for default judgment.

III.

For these reasons, the district court’s denials of Trang’s motions to 

remand and for default judgment are

AFFIRMED.

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