United States Court of Appeals

for the Fifth Circuit

No. 20-10378

FFGGP, Incorporated, a Delaware Corporation as Trustee 

for the Fairway Park 2775 Land Trust, 

Plaintiff—Appellant,

versus

Specialized Loan Servicing, L.L.C., a Delaware Limited 

Liability Company, 

Defendant—Appellee.

Appeal from the United States District Court

for the Northern District of Texas

USDC No. 4:18-CV-875

Before Owen, Chief Judge, and King and Engelhardt, Circuit Judges.

Per Curiam:*

Plaintiff FFGGP, Incorporated (“FFGGP”) appeals the district 

court’s grant of summary judgment in favor of Defendant Specialized Loan 

Servicing, L.L.C. (“SLS”). 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opinion should not be published and is not precedent except under the limited 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

December 17, 2020

Lyle W. Cayce

Clerk

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I.

Roger D. Freeman executed a Home Equity Note and Deed of Trust

(collectively “the Note”) in favor of American Southwest Mortgage Corp., 

granting a lien (“Home Equity Lien”) on a piece of real estate in Grand 

Prairie, Texas (“Property”). The Note subsequently was assigned to Bank 

of America. After Freeman passed away, his estate (“Freeman’s Estate”)

failed to remit monthly mortgage payments due under the Note, and Bank of 

America sent Freeman’s Estate a Notice of Default and Intent to Accelerate.

A second lien was filed against the Property by Fairway Park 

Homeowners Association, Inc. (“HOA”) after Freeman’s Estate failed to 

pay assessment dues (“HOA Assessment Lien”). Pursuant to the HOA 

Declarations and Covenants, the HOA Assessment Lien was subordinate to 

any mortgage lien on the Property. FFGGP alleges that it acquired the 

Property under the HOA Assessment Lien Deed.

Bank of America sent Freeman’s Estate a Notice of Acceleration after 

it continued to neglect mortgage payments. Thereafter, Bank of America, 

along with its unnamed “successors and assigns,” filed a Petition Seeking a 

Judicial Judgment for Foreclosure (“Foreclosure Action”) against 

Freeman’s Estate in the 96th Judicial District Court of Tarrant County

(“96th JDC”). While the Foreclosure Action was pending, Bank of America 

assigned the Note to SLS. The state court entered a default judgment in favor 

of Bank of America, “or its successors or assigns in interest,” ordering 

enforcement of the Home Equity Lien through a Foreclosure Sale

(“Foreclosure Order”). Subsequently, SLS sent Freeman’s Estate a second 

Notice of Acceleration and a Notice of Foreclosure Sale.

FFGGP then filed a separate lawsuit for declaratory relief and to quiet 

title against SLS in the 96th JDC to collaterally attack the default judgment 

from the Foreclosure Action. SLS removed the case to the Northern District 

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of Texas based on diversity jurisdiction. Shortly after removal, SLS 

foreclosed on the Home Equity Lien at a Foreclosure Sale. Through its 

amended pleadings, FFGGP sought a declaration that the state court issued 

the Foreclosure Order without subject matter jurisdiction and that the

subsequent Foreclosure Sale was void.

SLS moved for summary judgment, arguing that it enforced a valid 

Foreclosure Order through the Foreclosure Sale as Bank of America’s 

assignee on the Note. FFGGP responded with a cross-motion for summary 

judgment, arguing that the failure to explicitly substitute SLS as Bank of 

America’s assignee during the pending Foreclosure Action divested the state 

court of subject matter jurisdiction to issue the Foreclosure Order, thus 

rendering the Foreclosure Sale void. The district court rejected FFGGP’s 

argument and granted summary judgment in favor of SLS.

On appeal, FFGGP argues that there is no genuine issue of material 

fact that the state court was divested of subject matter jurisdiction over the 

pending Foreclosure Action when SLS was not explicitly substituted as 

plaintiff in Bank of America’s place, thus rendering the Foreclosure Order 

and Sale void. In response, SLS contends that the state court never lost 

subject matter jurisdiction over the Foreclosure Action because SLS—Bank 

of America’s assignee on the Note—was implicitly named as a plaintiff in the 

state court petition and as a party entitled to enforce the Foreclosure Order 

in the default judgment.

II.

We review the motion for summary judgment de novo, and we apply 

the same standard as the district court, viewing the evidence in the light most 

favorable to the nonmovant. First Am. Title Ins. Co. v. Continental Cas. Co., 

709 F.3d 1170, 1173 (5th Cir. 2013). Summary judgment is appropriate where 

“there is no genuine dispute as to any material fact and the movant is entitled 

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to judgment as a matter of law.” FED.R.CIV. P. 56(a). Courts do not disfavor 

summary judgment, but, rather, look upon it as an important process through 

which parties can obtain a “just, speedy and inexpensive determination of 

every action.” Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). A party 

asserting that there is no genuine dispute as to any material fact must support 

its assertion by citing to particular parts of materials in the record. FED. R.

CIV. P. 56(c)(1)(A).

III.

FFGGP acknowledges that Bank of America was the proper plaintiff 

to initiate the Foreclosure Action and that SLS was Bank of America’s lawful 

assignee on the Note. The state court record confirms that SLS was always 

implicitly part of the Foreclosure Action, because Bank of America’s 

“assigns” and “successors in interest” were named as plaintiffs in the 

petition and listed as parties entitled to enforce the Foreclosure Order in the 

default judgment. FFGGP contends that implicit references to SLS were 

insufficient for the state court to maintain subject matter jurisdiction and that 

Texas law required SLS to be explicitly substituted in Bank of America’s 

place upon assignment of the Note.

“When reviewing issues of state law, federal courts look to the law of 

that state’s highest court.” City of Alexandria v. Brown, 740 F.3d 339, 351 (5th 

Cir. 2014). Absent a final decision by the Texas Supreme Court that 

“precisely resolves the legal issue, we must make an Erie guess and 

determine as best we can what the Supreme Court of Texas would 

decide.” Martinez v. Walgreen Co., 935 F.3d 396, 398 (5th Cir. 2019) (citation 

omitted). When compelled to make an Erie guess, federal courts “defer to 

intermediate state appellate court decisions, unless convinced by other 

persuasive data that the highest court of the state would decide 

otherwise.” Mem’l Hermann Healthcare Sys. Inc. v. Eurocopter Deutschland, 

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GMBH, 524 F.3d 676, 678 (5th Cir. 2008) (citations omitted). Federal courts 

not only look to intermediate state appellate decisions, but also to “the 

general rule on the issue, decisions from other jurisdictions, and general 

policy concerns.” Martinez, 935 F.3d at 398 (citations omitted).

Although the Texas Supreme Court has not directly addressed the 

issue, Texas appellate caselaw is clear that where a plaintiff assigns its 

interest in a pending lawsuit to another, the assignment does not alter the 

parties’ rightsto the prejudice of the defendant, the lawsuit may be continued 

in the name of the original plaintiff, substitution of the assignee is not 

mandatory, and the court has the discretion to allow a motion to substitute.

Int’l Shelters, Inc. v. Pinehurst Inv. Corp., 474 S.W.2d 497, 499-500 (Tex. Civ. 

App. 1971), writ dismissed (Mar. 22, 1972); Mitchell, Gartner & Thompson v. 

Young, 135 S.W.2d 308 (Tex. Civ. App. 1939), writ refused; Paxton v. First 

State Bank of Tatum, 42 S.W.2d 837, 839 (Tex. Civ. App. 1931); FergusonMcKinney Dry Goods Co. v. Garrett, 252 S.W. 738, 741 (Tex. Comm’n App. 

1923); Lee v. Salinas, 15 Tex. 495, 498 (1855).

Texas appellate caselaw comports with Federal Rule of Civil 

Procedure 25(c), which provides that “[i]f an interest is transferred, the 

action may be continued by or against the original party unless the court, on 

motion, orders the transferee to be substituted in the action or joined with 

the original party.” Several cases from this court illustrate the policy of Rule 

25(c) that the original interest holder has standing to litigate a lawsuit to final 

judgment and that an assignee may enforce that judgment. Christiana Tr. v. 

Riddle as next friend of Riddle, 819 F. App’x 255, 256 (5th Cir. 2020) (per 

curiam) (plaintiff’s assignment of home equity loan to a bank while a 

foreclosure lawsuit was pending did not render the case moot, because “a live 

controversy—albeit between different parties—persisted”); FDIC v. SLE, 

Inc., 722 F.3d 264, 270 (5th Cir. 2013) (“in light of Rule 25’s wholly 

permissive terms,” a successor in interest “was not required under Rules 

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25(c) and (a)(3) to substitute as a transferee” to have standing to enforce a 

judgment); Matter of Texas Gen., No. 93-2399, 1994 WL 24886, at *1 (5th Cir. 

Jan. 12, 1994) (concluding that it was erroneous to dismiss a claim for lack of 

standing due to a transfer of interest that occurred while litigation was 

pending); Matter of Covington Grain Co., Inc., 638 F.2d 1362, 1364 (5th Cir. 

1981) (“Rule 25(c) . . . is designed to allow the action to continue unabated 

when an interest in the lawsuit changes hands.”).

FFGGP cites two Texas appellate court decisions in support of its 

argument that a mid-suit assignment of interest divests a court of subject 

matter jurisdiction absent explicit substitution of the assignee. Kingman 

Holdings, LLC v. Mortg. Elec. Registration Sys., Inc., 2016 WL 8115937 (Tex. 

App. Oct. 27, 2016); Mortg. Elec. Registration Sys., Inc. v. Disanti, 2011 WL 

255815 (Tex. App. Jan. 27, 2011). However, neither case addressed a midsuit assignment of interest, as both cases involved lawsuits filed after the 

assignment occurred and a lack of subject matter jurisdiction at the 

commencement of the lawsuit. Kingman Holdings, 2016 WL 8115937, at *5–

7; Mortg. Elec. Registration Sys., 2011 WL 255815, at *2. The present case is 

distinguishable, because it is undisputed that subject matter jurisdiction was

present when Bank of America filed the Foreclosure Action. FFGGP also 

cites a case where a Texas appellate court held that an employee allegedly 

injured on the job did not have a right to substitute himself as the real party 

in interest in a workers’ compensation insurer’s action after the action had 

already been dismissed and that his substitution was required to occur before

disposition of the action. Rodriguez v. Crutchfield, 301 S.W.3d 772, 775 (Tex. 

App. 2009). However, unlike the present matter, Rodriguez did not involve a 

mid-suit assignment of a single interest, because the workers’ compensation 

insurer asserted its own claim for subrogation, and the employee attempted 

to assert his own claim for damages. Id. at 776.

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Based on the lack of a Texas Supreme Court decision precisely 

resolving the issue, deference to Texas appellate caselaw, and consideration 

of this court’s decisions interpreting Rule 25(c)’s policies, this court makes 

a confident Erie guess that the Texas Supreme Court would have concluded

that explicit substitution of SLS as plaintiff in the Foreclosure Action was not 

required and that subject matter jurisdiction was present throughout the 

lawsuit. Thus, there is no genuine issue of material fact that the Foreclosure 

Order was validly issued by the state court and validly enforced by SLS 

through the Foreclosure Sale as Bank of America’s lawful assignee on the 

Note.

IV.

For the foregoing reasons, the judgment is AFFIRMED.

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