United States Court of Appeals

for the Fifth Circuit

No. 21-10493

Bartolomeo USA, L.L.C.,

Plaintiff—Appellant,

versus

United States Department of Housing and Urban 

Development; Marcia Fudge, Secretary, U.S. 

Department of Housing and Urban Development,

Defendants—Appellees.

Appeal from the United States District Court 

for the Northern District of Texas

No. 4:19-CV-1020

Before Barksdale, Engelhardt, and Oldham, Circuit Judges.

Per Curiam:*

The question presented is whether the U.S. Department of Housing 

and Urban Development properly foreclosed on a loan. The district court 

said yes and granted summary judgment to the Government. We affirm.

* Pursuant to 5th Circuit Rule 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opinion should not be published and is not precedent except under the limited 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 Circuit Rule 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

November 22, 2021

Lyle W. Cayce

Clerk

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I.

In 2009, Gloria Carter took out a reverse mortgage (also called a 

Home Equity Conversion Mortgage or “HECM”) in Fort Worth, Texas. 

She took out the HECM under a program run by the U.S. Department of 

Housing and Urban Development (“HUD”). It is called a reverse mortgage 

“because the borrower is not required to make monthly or other periodic 

payments to repay the loan” unlike a traditional mortgage. Johnson v. World 

All. Fin. Corp., 830 F.3d 192, 195–96 (5th Cir. 2016); see also 12 U.S.C. 

§ 1715z-20(b)(3). “Instead, the loan balance increases over time and does not 

become due and payable until one of a number of specified events occurs.” 

Johnson, 830 F.3d at 196; see also 12 U.S.C. § 1715z-20(j). The lender may 

only recover the borrower’s house or its sale value. 12 U.S.C. § 1715z20(d)(7).

Under the program, HUD “insures reverse mortgages originated by 

private lenders.” Johnson, 830 F.3d at 196 n.2. This means that HUD

provides the borrower any funds that the private lender is obligated to pay 

but for some reason does not. 12 U.S.C. § 1715z-20(i); 24 C.F.R. §§ 206.117, 

206.121(a). To implement this program, the parties agree that in general two 

deeds of trust are issued and recorded reflecting two mortgages. See, e.g., 24

C.F.R. §§ 206.27, 206.117, 206.121. The private lender originates the loan 

through a First Note and secures that note in a First Deed of Trust (the first 

mortgage). 12 U.S.C. § 1715z-20. The borrower executes a Second Note and 

secures that note in a Second Deed of Trust (the second mortgage). See, e.g., 

24 C.F.R. §§ 206.27(d), 206.121(c). The second mortgage becomes relevant 

if HUD makes payments instead of the private lender. Id. § 206.121(c). To 

protect the private lender, the HECM program lets the lender transfer the 

First Note and First Deed of Trust to HUD before repayment from the 

borrower but only when the borrower’s indebtedness reaches 98% of the 

maximum loan. Id. §§ 206.107(a), 206.123(a).

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Here, there are two deeds of trust, and both of them were timely 

recorded. There is no dispute that at the time of recording the deeds were 

valid. By July 2014, Carter’sindebtedness reached 98% of the maximum loan, 

and the private lender transferred the lien in the First Deed of Trust to HUD. 

HUD therefore owned both deeds of trust. But because the private lender 

paid all the funds for the loan, HUD never made any payments to Carter. 

This meant that repayment by Carter was only necessary under the first 

mortgage involving the First Deed of Trust—not the second mortgage 

involving the Second Deed of Trust. In 2016, the required preconditions 

occurred making the loan due.

On January 3, 2018, HUD’s limited power of attorney recorded a 

“Release of Lien” (or “Release”) for the Second Deed of Trust. There is no 

dispute that the Release is valid. The Release is two pages: The first page has 

definitions; the second page has the operative language. Put together, the 

Release states:

Holder of Note and Lien [HUD] acknowledges payment in full 

of the Original Note [note described in Deed of Trust, recorded 

in Instrument Number D209166845, 06/23/2009, Real 

Property Records of Tarrant County, TX], releases the 

Property from the Lien [Lien described in Deed of Trust, 

recorded in Instrument Number D209166845, 06/23/2009, 

Real Property Records of Tarrant County, TX] and expressly 

waives and releases all present and future rights to establish or 

enforce the Lien as a security for payment of any future 

advance or other indebtedness.

The Deed of Trust recorded in Instrument Number D209166845 is the 

Second Deed of Trust; the First Deed of Trust has a different number.

In March 2019, Carter sold the house to RMDC, LLC. On April 11, 

HUD filed a notice with the relevant county clerk that a foreclosure sale 

would occur on May 7; the notice was posted at the relevant courthouse. On 

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April 16, among other days, HUD published notice in the county’s 

commercial record. Also on April 16, Bartolomeo USA, LLC 

(“Bartolomeo”) purported to purchase the property. It also made about 

$80,000 worth of improvements to the property. The foreclosure sale 

occurred on May 7, and HUD bought the property back on May 14.

Soon after, Bartolomeo sued HUD and sought equitable relief. The 

district court granted summary judgment to HUD. Bartolomeo timely 

appealed. Our review is de novo. Playa Vista Conroe v. Ins. Co. of the W., 989 

F.3d 411, 414 (5th Cir. 2021).

II.

Applying Texas law, the district court made three relevant 

determinations. First, the court determined that the Release only 

extinguished the Second Deed of Trust, so HUD properly foreclosed on the 

property under the First Deed of Trust. Specifically, the court concluded that 

the relevant language released a specific lien, not a particular loan. It 

emphasized that the Release expressly names the “Lien described in Deed of 

Trust, recorded in Instrument Number D209166845”—the Second Deed of 

Trust—and does not mention the First Deed of Trust. Because “[e]ach note 

was made out to [a] separate lender, and each lender had a separately 

recorded lien,” continued the court, the “obligations and duties are 

separate.” So the Release, by invoking only the Second Deed of Trust, “did 

not affect the First Deed of Trust.”

Second, the court determined that Bartolomeo was neither a goodfaith purchaser nor a good-faith improver. That is because, the court 

explained, Bartolomeo was on constructive notice of the properly recorded 

First Deed of Trust and thus had constructive knowledge of HUD’s superior 

right to the property.

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Third, the court determined that 28 U.S.C. § 2410 did not apply

because HUD had title to the property and not just a security interest. The 

court thus granted HUD summary judgment and dismissed all of 

Bartolomeo’s claims with prejudice. 

We see no reversible error in the district court’s determinations. One

issue, however, warrants brief discussion.

The district court dismissed Bartolomeo’s claim under 28 U.S.C. 

§ 2410 with prejudice. This was so even though the court referred to “subject 

matter jurisdiction.” That might give the reader pause because dismissals for 

lack of jurisdiction are generally without prejudice. See, e.g., Sullivan v. Texas 

A&M Univ. Sys., 986 F.3d 593, 595 (5th Cir. 2021).

We hold the district court correctly dismissed the § 2410 claim with 

prejudice. Section 2410 creates a right of action and waives sovereign 

immunity. See Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 

U.S. 308, 317 n.4 (2005) (“Federal law does provide a quiet title cause of 

action against the Federal Government. 28 U.S.C. § 2410.”); Lewis v. Hunt, 

492 F.3d 565, 571 (5th Cir. 2007) (“Under 28 U.S.C. § 2410, Congress has 

waived the government’s sovereign immunity to a limited class of civil 

actions . . . .”); cf. Caleb Nelson, “Standing” and Remedial Rights in 

Administrative Law, 105 Va. L. Rev. 703, 705 n.2 (2019) (acknowledging 

that today the terms “cause of action” and “right of action” are 

interchangeable but also explaining how the terms were not always 

considered the same). As a result, the jurisdictional question here (whether 

the United States waived sovereign immunity) is identical to a merits 

question (whether Bartolomeo has a right of action under § 2410). So, in 

these circumstances, it was appropriate for the district court to dismiss 

Bartolomeo’s § 2410 claim with prejudice. See Brownback v. King, 141 S. Ct. 

740, 749 (2021) (“But where, as here, pleading a claim and pleading 

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jurisdiction entirely overlap, a ruling that the court lacks subject-matter 

jurisdiction may simultaneously be a judgment on the merits.”); id. at 749 n.8 

(“In cases such as this one where a plaintiff fails to plausibly allege an element 

that is both a merit element of a claim and a jurisdictional element, the district 

court may dismiss the claim under Rule 12(b)(1) or Rule 12(b)(6). Or both.”).

* * *

We have considered Bartolomeo’s other arguments and find them 

unpersuasive. For the foregoing reasons, and for substantially the same 

reasons given in the district court’s thorough opinion, we refuse to disturb 

the judgment.

AFFIRMED.

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