IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

 

DEUTSCHE BANK NATIONAL TRUST §

COMPANY, as Indenture Trustee of the §

Aames Mortgage Investment Trust 2004-1, §

 §

Plaintiff, §

 §

v. § Civil Action No. 4:22-cv-00572-O

 § 

JESSE A. VALVERDE, et al., §

§ 

Defendants. §

FINDINGS, CONCLUSIONS, AND RECOMMENDATION

OF THE UNITED STATES MAGISTRATE JUDGE

Plaintiff, Deutsche Bank National Trust Company (“Deutsche Bank”), initiated foreclosure 

proceedings against the property of Defendants Jesse A. Valverde and Yolanda Valverde 

(“Borrowers”) after they failed to make their monthly payments as described in the Loan 

Agreement. ECF No. 1. At Deutsche Bank’s request (ECF No. 13), the Clerk of the Court entered 

Borrowers’ default on September 14, 2022. ECF No. 16. Deutsche Bank filed its Motion for 

Default Judgment on the same day. ECF No. 15. United States District Judge Reed O’Connor 

referred the Motion for Default Judgment and all related pleadings to the undersigned on 

September 16, 2022. ECF No. 17. After reviewing the pleadings and applicable legal authorities, 

the undersigned RECOMMENDS that Judge O’Connor GRANT the Motion for Default 

Judgment against the Borrowers and award attorney fees in an amount to be determined by 

subsequent motion and order.

I. BACKGROUND

Borrowers own certain real property and improvements at 3025 Tex Blvd., Fort Worth, 

Texas 76116 (“Property”). ECF No. 1 at 4. On or about October 19, 2004, Jesse Valverde executed 

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a Texas Home Equity Note (“Note”) payable to Aames Funding Corporation, in the maximum 

principal amount of $110,400.000, plus interest. Id. Jesse Valverde and his wife, Yolanda, also 

executed a Texas Home Equity Security Instrument (“Security Instrument”), securing payment of 

the Note with a first lien on the Property. Id. The Note and Security Instrument are collectively

referred to as the “Loan Agreement.” Subsequently, Aames assigned and transferred the Loan 

Agreement to Deutsche Bank. Id. at 5. Deutsche Bank then became the mortgagee of the Loan 

Agreement, as defined by Texas Property Code § 51.0001(4). Id. 

Under the terms of the Loan Agreement, the Borrowers were required to pay the principal 

and interest on the debt evidenced by the Note when due, as well as any other applicable charges 

and fees. Id. If the Borrowers failed to make payments on the Note as they became due or failed 

to comply with any of the conditions of the Loan Agreement, Deutsche Bank could enforce the 

Security Instrument by selling the property according to law and in accordance with the provisions 

set forth in the Loan Agreement. Id. 

Borrowers failed to make timely payments on the amount owed on the Loan Agreement. 

Id. As a result, Deutsche Bank mailed them a Notice of Default, and when the Borrowers did not 

cure the default, Deutsche Bank accelerated the Loan Agreement. Id. Deutsche Bank also mailed 

Borrowers a Notice of Acceleration. Id. Borrowers have incurred a debt of $121,358.15 for unpaid 

payments as of June 24, 2022. Id. at 3.

Deutsche Bank filed the pending suit against the Borrowers on July 5, 2022. ECF No. 1. 

On July 13, 2022, a certified process server personally served process on Jesse Valverde. ECF No. 

6. The process server served Yolande Valverde by hand delivery of the process to her husband at 

their residence. ECF No. 7. Despite proper service of process upon them, Borrowers have not 

responded to the instant suit.

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II. LEGAL STANDARD 

Federal Rule of Civil Procedure 55 governs the entry of default and default judgment.

There are three stages to entry of default judgment. First, a default occurs “when a defendant has

failed to plead or otherwise respond to the complaint within the time required by the Federal

Rules.” N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996); see also Fed. R. Civ. P. 

55(a) (noting default occurs where the defendant “has failed to plead or otherwise defend” against 

the complaint). Second, the Clerk may enter a defendant’s default if it is “established by affidavit 

or otherwise.” Brown, 84 F.3d at 141 (citing Fed. R. Civ. P. 55(a)). Third, if the Clerk enters 

default, the plaintiff must apply for a default judgment from the Court. Fed. R. Civ. P. 55(b)(2). 

The Court may not enter default judgment against an individual in military service until an attorney 

is appointed to represent the defendant. 50 U.S.C. § 521.

However, “[a] party is not entitled to a default judgment as a matter of right, even where 

the defendant is technically in default.” Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001). Rather, 

courts retain ultimate discretion to grant or deny default judgments. Lindsey v. Prive Corp., 161 

F.3d 886, 893 (5th Cir. 1998). The Fifth Circuit has “adopted a policy in favor of resolving cases 

on their merits and against the use of default judgments,” although this policy is “counterbalanced 

by considerations of social goals, justice and expediency, a weighing process . . . within the domain 

of the trial judge’s discretion.” In re Chinese-Manufactured Drywall Prods. Liab. Litig., 742 F.3d 

576, 594 (5th Cir. 2014) (quoting Rogers v. Hartford Life & Accident Ins. Co., 167 F.3d 933, 936 

(5th Cir. 1999)). Default judgment remains “a drastic remedy, not favored by the Federal Rules.” 

Sun Bank of Ocala v. Pelican Homestead & Sav. Ass’n, 874 F.2d 274, 276 (5th Cir. 1989); see 

also U.S. for Use of M-Co Constr., Inc. v. Shipco General, Inc., 814 F.2d 1011, 1014 (5th Cir. 

1987 (calling default judgments “draconian”). 

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Courts use a three-pronged analysis to determine if default judgment is appropriate. J & J 

Sports Prods., Inc. v. Morelia Mex. Rest., Inc., 126 F. Supp. 3d 809, 813 (N.D. Tex. 2015). First, 

they ask if default judgment is procedurally warranted. See Lindsey, 161 F.3d at 893. Second, they 

analyze the substantive merits of the plaintiff’s claims and determine if the pleadings establish a 

sufficient basis for default judgment. Nishimatsu Constr. Co. v. Hous. Nat’l Bank, 515 F.2d 1200, 

1206 (5th Cir. 1975). Third, they determine what form of relief, if any, the plaintiff should receive. 

Morelia, 126 F. Supp. 3d at 813.

III. ANALYSIS

The Clerk entered Deutsche Bank’s default against the Borrowers (ECF No. 16), and the 

Court now must determine if default judgment is appropriate. Lewis, 236 F.3d at 767. To do so, 

the undersigned applies the three-pronged inquiry. See Morelia, 126 F. Supp. 3d at 813. The 

Borrowers are not individuals in military service and, therefore, the Court can evaluate, and 

potentially grant, default judgment against the Borrowers pursuant to 50 U.S.C. § 521. See ECF 

No. 15-1 at 5, 7. 

A. Default judgment is procedurally appropriate under Lindsey. 

Under Lindsey, courts look to six factors to determine whether a default judgment is 

procedurally warranted. See Lindsey 161 F.3d at 893. The Court will consider whether: (1) material 

issues of fact exist; (2) there has been substantial prejudice; (3) the grounds for default are clearly 

established; (4) the default was caused by a good faith mistake or excusable neglect; (5) default 

judgment would be too harsh; and (6) the court would be obliged to set aside the default upon 

motion from the defendant. Id. All six of the Lindsey factors support the entry of default judgment 

against the Borrowers. 

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No material issues of fact remain concerning Borrowers’ failure to pay the amounts owed 

on the Loan Agreement. Borrowers have not filed any responsive pleadings, no material facts are 

in dispute, and the Court may take Deutsche Bank’s pleadings as true. See Id.; Nishimatsu, 515 

F.2d at 1206 (noting that “[t]he defendant, by his default, admits the plaintiff’s well-pleaded 

allegations of fact.”). The first Lindsey factor favors default judgment. 

Similarly, nothing in the record suggests any “substantial prejudice” towards the Borrowers 

that would undermine Deutsche Bank’s entitlement to default judgment. See Lindsey, 161 F.3d at 

893. Deutsche Bank properly served the Borrowers with the Complaint, and the Borrowers were 

given ample time and opportunity to respond in this matter. See ECF Nos. 5, 6. A process server 

personally served Jesse Valverde, which constitutes proper service under Federal Rule of Civil 

Procedure 4(e)(2)(A). Likewise, the process server left a copy of process for Yolanda Valverde at 

her home (“her dwelling or usual place of abode”) with her husband, Jesse Valverde (“someone of 

suitable age and discretion who resides there”), which satisfies the requirements of Federal Rule 

of Civil Procedure 4(e)(2)(B). See Hanna v. Plumer, 380 U.S. 460, 461 (1965) (holding that 

leaving the summons and complaint with the respondent’s wife at the respondent’s residence was 

proper service to someone with suitable age and discretion); see also People's United Equip. Fin. 

Corp. v. Hartmann, 447 F. App'x 522, 524 (5th Cir. 2011) (holding that defendant’s wife was a 

person of suitable age and discretion and, therefore, service of process was proper under Fed. R.

Civ. P. 4(e)). Further, the certified process server attested in a statement sworn to before a notary 

that he delivered the process to the residence of Jesse Valverde and Yolanda Valverde. ECF No. 

7. 

Additionally, the process server’s delivery of process to Jesse Valverde at Yolanda 

Valverde’s residence was enough to constitute proper service on her under the Texas Rules of 

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Civil Procedure. See Fed. R. Civ. P. 4(e)(1) (service on an individual within a judicial district may 

be made by “following state law for serving a summons in an action brought in courts of general 

jurisdiction in the state where the district court is located or where service is made”). Texas Rule 

106 allows service by leaving a copy of process with anyone older than sixteen at the location 

where the defendant probably can be found if a process server unsuccessfully attempts to serve 

process on a defendant at that location. The process server here left a copy of the process at 

Yolanda Valverde’s residence, a location where she could probably have been found, with her 

husband Jesse Valverde, an individual older than sixteen years of age. ECF No. 7. 

Although the record does not state Jesse Valverde’s age, the Court notes that he was over 

sixteen years of age when he was served in July 2022 because he executed the Loan Agreement 

on October 19, 2004. ECF No. 1-1 at 2, 9. This is enough to establish that he was over the age of 

sixteen, and the process server could leave the service of process documents with him under Texas

Rule of Civil Procedure 106(b)(1). Moreover, the process server attested in a statement sworn to 

before a notary that he delivered the documents to Jesse Valverde at Yolanda Valverde’s residence. 

ECF No. 7. Therefore, Deutsche Bank properly served Borrowers with process and notified them 

of this case. Lindsey’s second factor also favors default judgment. 

The grounds for default in this case were clearly established, and nothing in the record 

indicates that the default is due to a “good faith mistake or excusable neglect.” See Lindsey, 161 

F.3d at 893. Deutsche Bank properly served process upon the Borrowers through a certified 

process server on July 13, 2022. ECF Nos. 6, 7. Deutsche Bank also mailed a copy of its Motion 

for Default Judgment to the Borrowers on September 14, 2022. ECF No. 15. However, despite 

having multiple opportunities and reasonable time to answer Deutsche Bank’s foreclosure action, 

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the Borrowers failed to respond or file any other pleadings explaining their unresponsiveness. 

Therefore, the third and fourth Lindsey factors favor default. 

Additionally, default judgment against the Borrowers would not be too harsh a remedy 

given their failure to respond to Deutsche Bank’s Complaint. See Lindsey, 161 F.3d at 893; see 

also Joe Hand Promotions, Inc. v. Tacos Bar & Grill, LLC, No. 3:16-cv-01889-M, 2017 F.3d at 

893, at *2 (N.D. Tex. Jan. 26, 2017) (“Entering default judgment against [Defendants], who have 

taken no action to respond to this action, is not ‘harsh.’”) (citing Lindsey, 161 F.3d at 893); John 

Perez Graphics & Design, LLC v. Green Tree Inv. Grp., No. 3-12-cv-4194-M, 2012 WL 1828671, 

at *3 (N.D. Tex. May 1, 2012) (“[Defendant] has had over five months to answer or otherwise 

respond to Plaintiff’s complaint, mitigating the harshness of a default.”). Default judgment is 

proportionate to the Borrowers’ conduct. The fifth Lindsey factor favors default. 

Finally, given the clear satisfaction of the first five factors, nothing indicates that the Court 

would “be obliged to set aside the default upon motion from the defendant.” See Lindsey, 161 F.3d 

at 893; see also Moreno v. LG Elecs., 800 F.3d 692, 698 (5th Cir. 2015) (noting district courts are 

not obliged to set aside a default where “the default was willful, the plaintiff will be prejudiced, or 

the defendant has no meritorious defense.”). Accordingly, the Lindsey analysis reflects default 

judgment is proper here. 

B. The pleadings establish a sufficient basis for default judgment.

Deutsche Bank requests the Court to enter default judgment against the Borrowers and 

issue a declaration that Deutsche Bank’s statutory probate lien against the Property should be 

enforced by foreclosure or public action—or alternatively, a judgment for judicial foreclosure—

so that the Borrowers are divested of their rights, title, and interest to the Property. ECF No. 1 at 

5-7. Deutsche Bank seeks to enforce this statutory probate lien under Texas Property Code § 

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51.002. ECF No. 1 at 6. However, under Texas law a party must secure a court order authorizing 

foreclosure on property securing a lien on homestead, such as the one at issue. ECF No. 1-1; Tex. 

Const. art. XVI § 50(a)(6)(C). 

Section 51.002 of the Texas Property Code provides for the sale of real property pursuant 

to a security instrument with a power of sale. Deutsche Bank has produced a copy of the Security 

Instrument signed by the Borrowers, which evidences that Deutsche Bank is the current holder of 

the Note and has the right to enforce the Note and Security Instrument. ECF No. 1-1 at 9-25. To 

foreclose under a security instrument with a power of sale, the lender need only demonstrate that: 

(1) a debt exists; (2) the debt is secured by a lien created under art. XVI, § 50(a)(6) of the Texas 

Constitution; (3) the defendant is in default under the note and security instrument; and (4) the 

defendant received notice of default and acceleration. Tex. Prop. Code § 51.002. Huston v. U.S. 

Bank Nat. Ass'n, 988 F. Supp. 2d 732, 740 (S.D. Tex. 2013), aff'd, 583 F. App'x 306 (5th Cir. 

2014); Bowman v. CitiMortgage, Inc., 768 F. App'x 220, 223 (5th Cir. 2019).

The Borrowers’ default serves as an admission of Deutsche Bank's allegations. See 

Nishimatsu, 515 F.2d at 1206. Thus, a consequence of the entry of a default judgment is that the 

factual allegations of the Complaint will generally be taken as true. Shipco, 814 F.2d at 1014. 

Deutsche Bank’s uncontested Complaint establishes that the Borrowers have incurred a debt of 

$121,358.15 for unpaid payments as of June 24, 2022 (ECF No. 1 at 3) and, therefore, are in default 

under the Note and the Security Instrument. Moreover, the uncontested Complaint shows that 

Deutsche Bank sent a Notice of Default to the Borrowers on February 22, 2022, and the Notice of 

Acceleration to the Borrowers on May 26, 2022. ECF No. 1 at 5. Deutsche Bank has also provided 

evidence that the Borrowers granted a lien created under art. XVI, § 50(a)(6) of the Texas 

Constitution to secure the debt. ECF No. 1-1 at 11. Based on the uncontested record, the Complaint 

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establishes that Deutsche Bank has satisfied the necessary requirements of Texas Property Code § 

51.002.

C. Deutsche Bank is entitled to an order granting non-judicial foreclosure sale of 

the Property and an award of attorney fees in an amount to be set by 

subsequent motion and order.

After determining that a default judgment is both procedurally valid and substantively wellfounded, the Court must determine what form of relief Deutsche Bank should recover. Morelia, 

126 F. Supp. 3d at 813. In making this determination, the Complaint’s “well-pleaded factual 

allegations are taken as true, except regarding damages.” Shipco, 814 F.2d at 1014.

Deutsche Bank requests that the Court enter an order allowing it to proceed with nonjudicial foreclosure sale in accordance with the Security Instrument, Tex. R. Civ. P. 735, and Texas 

Property Code § 51.002, or, alternatively, through a judgment for judicial foreclosure instructing 

a marshal or sheriff to seize and sell the Property in satisfaction of the judgment. ECF No. 15 at 3. 

Because Deutsche Bank has shown that it has satisfied the necessary requirements of Texas 

Property Code § 51.002, the Court should grant its request and enter an order authorizing the 

foreclosure sale of the Property. 

Deutsche Bank also asks the Court to award it attorney fees as additional debt owed on the 

underlying loan agreement, and not as a personal judgment, along with all costs of suit. Id. 

This request is consistent with the Loan Agreement (see ECF No. 1-1 at 21) and applicable legal 

authorities. See Huston, 988 F. Supp. 2d at 741 (“[W]hile the mortgagor is not personally liable 

for attorneys’ fees, the mortgagee may recover its attorneys’ fees, if permitted under the relevant 

contract, against the mortgaged property after a foreclosure sale.”); see also, e.g., Deutsche Bank

Nat’l Tr. Co. v. Blackerby, No. 1:17-cv-00132-RP, 2017 WL 8811742, at *4 (W.D. Tex. Dec. 28, 

2017) (ordering “that the following are secured by the Security Instrument on the Property: the 

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outstanding balance of the debt; prejudgment interest; post-judgment interest; and court costs”), 

rec. adopted sub nom. Deutsche Bank Nat’l Tr. Co. as Tr. for Ameriquest Mortg. Sec., Inc., AssetBacked Pass-Through Certificates 2002-3 v. Blackerby, 2018 WL 8578437 (W.D. Tex. Feb. 26, 

2018).

However, Deutsche Bank has not offered evidence to support an award of attorney fees in 

a specific amount. The Court therefore should order that it recover its attorney fees in an amount 

to be determined by subsequent motion and order. See Fed. R. Civ. P. 54(d)(2).

IV. CONCLUSION 

Because Deutsche Bank properly served process on the Borrowers and default judgment is 

appropriate under the facts of the case, the undersigned RECOMMENDS that Judge O’Connor 

GRANT the Motion for Default Judgment (ECF No. 15) against the Borrowers, but order that 

Deutsche Bank recover its attorney fees in an amount to be determined by subsequent motion and 

order. See Fed. R. Civ. P. 54(d)(2). 

A copy of these findings, conclusions, and recommendation shall be served on all parties 

in the manner provided be law. Any party who objects to any part of these finding, conclusions, 

and recommendation must file specific written objections within fourteen days after being served 

with a copy. See 28 U.S.C § 636(b)(1); Fed R. Civ, 72(b)(2). To be specific, an objection must 

identify the particular finding or recommendation to which objection is made, state the basis for 

the objection, and specify the place in the magistrate’s findings, conclusions, and recommendation 

where the disputed determination is found. An objection that merely incorporates by reference or 

refers to the briefing before the magistrate judge is not specific. Failure to file specific written 

objections will bar the aggrieved party from appealing the factual findings and legal conclusions 

of the magistrate judge that are accepted or adopted by the district court, except upon grounds of 

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plain error. See Douglas v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1417 (5th Cir. 1996) (en 

banc). 

SIGNED on November 9, 2022.

______________________________________

Hal R. Ray, Jr.

UNITED STATES MAGISTRATE JUDGE

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