Court Opinion

ID: 4664581
Source: CourtListenerOpinion
Date Created: 2021-03-03 19:00:27.02827+00
Date Added: 2024-06-11T08:02:37.100678
License: Public Domain

Case: 20-50255     Document: 00515763020        Page: 1   Date Filed: 03/02/2021

              United States Court of Appeals
                   for the Fifth Circuit                            United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                                                       March 2, 2021
                                 No. 20-50255                         Lyle W. Cayce
                                                                           Clerk

   PNC Bank, National Association,

                                                          Plaintiff—Appellee,

                                     versus

   Sylvia Ruiz,

                                                       Defendant—Appellant.

                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 1:15-CV-770

   Before Elrod, Willett, and Engelhardt, Circuit Judges.
   Kurt D. Engelhardt, Circuit Judge:
         Appellant Sylvia Ruiz appeals a magistrate judge’s grant of Appellee
   PNC Bank’s (“PNC”) motion for summary judgment for foreclosure. Ruiz
   contests various evidentiary determinations and asserts that the magistrate
   judge erred in granting PNC’s motion for summary judgment, but she also
   challenges the magistrate judge’s jurisdiction to enter final judgment.
   Because we conclude that the magistrate judge lacked jurisdiction, we
   VACATE and REMAND for further proceedings consistent with this
   opinion.
Case: 20-50255      Document: 00515763020          Page: 2   Date Filed: 03/02/2021

                                    No. 20-50255

                                        I.
          Ruiz and her husband, Mark Rude, obtained a home equity loan (“the
   loan”) from National City Mortgage Co. (“National City”) on May 24,
   2002. Later that same year the couple divorced, leaving the property that
   secured the loan to Ruiz. Rude transferred his interest in the property to Ruiz
   and, in 2006, she asked National City to remove him from the loan.
          Subsequently, Ruiz failed to satisfy her payment obligations. On July
   2, 2009, National City sent a notice to Ruiz informing her that the loan was
   in default. The notice stated that, to avoid acceleration of the maturity date,
   she could cure the default by paying a certain amount by a specified date.
   There is no indication that she ever did so.
          PNC eventually obtained the loan by transfer on December 24, 2013,
   and twice proceeded through its attorneys to notify Ruiz—on April 28, 2014
   and June 25, 2014—that, because of her failure to cure the default, it had
   elected to accelerate the loan. Ruiz remains in default for the April 1, 2010
   payment and all subsequent payments in the unpaid principal amount of
   $167,795.91.
          Seeking judicial foreclosure and declaratory judgment, PNC initiated
   the instant litigation against Ruiz in federal court on September 2, 2015.
   Thereafter, the district court issued a scheduling order requiring the parties
   to file a notice of consent to trial by magistrate judge. Ruiz did so, but PNC
   expressly declined to consent on the provided form. Yet, apparently because
   of an erroneous entry by the clerk’s office, the docket text reflected that PNC
   had consented. That error lay dormant for some time because for much of
   the next two years, proceedings in the case were stayed as the parties engaged
   in unsuccessful settlement discussions. On lifting the stay in January 2019,
   the district court observed that Mark Rude—who was named, for uncertain
   reasons, in PNC’s original complaint but had not made any appearance—
   remained a party to the case. Noting, erroneously with respect to PNC, that

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                                     No. 20-50255

   Ruiz and PNC had consented to having a magistrate judge conduct all
   remaining proceedings in the case, the district court observed that trial before
   a magistrate judge was unavailable without Rude’s consent. Accordingly, the
   court instructed PNC that if it “intend[ed] to seek default judgment as to
   Rude, [it] must file such a motion on or before January 23, 2019.” PNC did
   so, and the court granted default judgment against Rude before transferring
   the case to a magistrate judge.
          In its transfer order, to which neither party objected despite the
   express refusal in the record, the court noted that “the parties in this case
   have waived the right to proceed before a judge of the United States District
   Court and consented to have a United States Magistrate Judge conduct all
   remaining proceedings in the case, including trial and the entry of
   judgment.” The magistrate judge then set and held a scheduling conference
   before entering an amended scheduling order. Again, neither party objected
   at any point; nor did PNC expressly consent. Ruiz then filed an amended
   answer and counterclaims and PNC filed a motion to substitute counsel—yet
   again, all without objection. Finally, both parties moved for summary
   judgment. On February 20, 2020, the magistrate judge granted PNC’s
   motion for summary judgment, denied Ruiz’s motion, and entered final
   judgment. Ruiz timely appealed.
                                        II.
          We first consider, as we must, whether the magistrate judge had
   jurisdiction to conduct proceedings and enter final judgment in this matter.
   See Roell v. Withrow, 538 U.S. 580, 598 (2003) (Thomas, J., dissenting)
   (“[T]he necessary precondition for a court of appeals’ jurisdiction over a
   magistrate judge’s order is the parties’ consent to proceed before the
   magistrate judge.”).     We conclude that the magistrate judge lacked
   jurisdiction and, it follows, so do we. Accordingly, our analysis must end
   where it begins, without reaching the merits of Ruiz’s appeal.

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          Pursuant to the Federal Magistrate Act, a magistrate judge “may
   conduct any or all proceedings in a jury or nonjury civil matter and order the
   entry of judgment in the case” if he is specially designated by the district
   court and all the parties’ voluntary consent is obtained.            28 U.S.C.
   § 636(c)(1).    Consent is thus “the touchstone of magistrate judge
   jurisdiction.” Anderson v. Woodcreek Venture Ltd., 351 F.3d 911, 914 (9th Cir.
   2003). In some circumstances, consent need not be express. See Roell, 538
   U.S. at 582. Implied consent can be deduced from a party’s conduct during
   litigation and is sometimes enough to satisfy the consent requirement. Id.
          But can consent implied by conduct alone trump a prior express and
   unambiguous statement of non-consent? In other words, can jurisdiction-by-
   estoppel overcome a written, properly-filed statement of non-consent? That
   is the question at issue here, and, until now, we have not had occasion to
   address it.
          Our analysis starts with Roell v. Withrow, 538 U.S. 580 (2003). In
   Roell, a pro se plaintiff agreed to have a magistrate judge preside over the
   entire case, but two defendants never filed the form to indicate either their
   consent or non-consent. Id. at 582–83. Nevertheless, the case proceeded
   before the magistrate judge all the way to judgment in favor of the defendants.
   Id. at 583. During the whole course of those proceedings, the defendants
   voluntarily participated, voicing “no objection when, at several points, the
   [m]agistrate [j]udge made it clear that she believed they had consented.” Id.
   at 584 (footnote omitted). This court, acting sua sponte, first raised the issue
   on appeal and concluded that express consent was required. See id. at 583.
   But the Supreme Court rejected that bright-line rule, holding that consent
   may be implied where “the litigant or counsel was made aware of the need
   for consent and the right to refuse it, and still voluntarily appeared to try the
   case before the [m]agistrate [j]udge.” Id. at 590. The Court reasoned that
   this approach served the “good pragmatic” end of judicial efficiency, id. at

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   588, while simultaneously checking “the risk of gamesmanship by depriving
   parties of the luxury of waiting for the outcome before denying the magistrate
   judge’s authority,” id. at 590.
          While obviously instructive, Roell is unlike this case. To begin, Roell
   held that consent may be implied only “in certain narrowly circumscribed
   contexts.” Bismark v. Fisher, 213 F. App’x 892, 895 (11th Cir. 2007)
   (interpreting Roell). See also Anderson, 351 F.3d at 915 (“Roell held that
   voluntary consent could be implied in limited, exceptional circumstances.”).
   It permitted implied consent only on the premise that the parties appeared
   before the magistrate judge “without expressing any reservation” about
   doing so. Id. at 586. That foundation is absent here, where, far beyond
   signaling reservation, PNC expressly declined to consent and never
   articulated any recantation of that refusal.
          Moreover, we have previously held that, while it allowed for implying
   consent from conduct, Roell nevertheless “did not alter our rule that the
   party’s consent must be clear and unambiguous.” Donaldson v. Ducote, 373
   F.3d 622, 624 n.1 (5th Cir. 2004). We cannot say that PNC’s consent was
   clear and unambiguous because its express statement of non-consent is flatly
   inconsistent with its subsequent conduct. See Stackhouse v. McKnight, 168 F.
   App’x 464, 466 (2d Cir. 2006) (holding that inconsistent conduct renders the
   evidence “inconclusive with respect to the parties’ intent” and “is not
   enough to demonstrate consent”). If PNC, like the defendants in Roell, had
   simply failed to register any position about referral to a magistrate judge, the
   outcome here may well have been different. We agree that, absent its express
   refusal to consent, PNC’s course of conduct during all proceedings before
   the magistrate judge likely would imply its consent. PNC signaled consent
   by conspicuously declining to object at any of the numerous opportunities it
   had for doing so and affirmatively litigating before the magistrate judge. But
   its prior inconsistent statement, which it never expressly recanted, renders

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   that subsequent conduct inconclusive and precludes us from inferring clear
   and unambiguous consent. See Donaldson, 373 F.3d at 624 n.1.
          A factual setting like this one seems to have arisen only once in our
   sister circuits. In Yeldon v. Fisher, a pro se plaintiff initially submitted a written
   form refusing consent but at no point thereafter objected when the case
   proceeded before a magistrate judge. 710 F.3d 452, 453 (2d Cir. 2013). The
   Second Circuit refused to infer consent. Id. Distinguishing Roell, the court
   noted that the plaintiff had affirmatively signed a consent form indicating that
   he did not consent to disposition of the case by a magistrate judge. Id.
   Furthermore, the court observed that, as a pro se litigant, the plaintiff “may
   not have appreciated that participating in proceedings before the [m]agistrate
   [j]udge could impugn the effectiveness of his written refusal to consent.” Id.
          PNC contends that Yeldon is inapposite because here “both parties
   were always represented by counsel and understood the significance of
   participating in proceedings before the magistrate judge.” But the Second
   Circuit did not hold that the plaintiff’s pro se status was a dispositive factor,
   and, regardless, we are not convinced that it ought to be. Whether a party is
   represented by counsel might generally be relevant to whether consent can
   be inferred, but it does not overcome the ambiguity created by the
   inconsistent implications of an express statement and subsequent contrary
   conduct.
          To be sure, dismissing this appeal for lack of jurisdiction seemingly
   rewards what might be characterized as gamesmanship on the part of Ruiz.
   See Hester v. Graham, Bright & Smith, P.C., 289 F. App’x 35, 40 (5th Cir.
   2008) (“Allowing parties to object to a [magistrate judge] and insist upon a
   new trial only when he issues an order unfavorable to them would allow a
   ‘gamesmanship’ of the system that the Supreme Court has sought to
   avoid.”). In other contexts, indeed, she might be estopped by her own

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                                    No. 20-50255

   acquiescence from now asserting PNC’s failure to consent. But not where,
   as here, fundamental questions of jurisdiction are involved. See Coury v. Prot,
   85 F.3d 244, 248 (5th Cir. 1996) (noting that “parties can never consent to
   federal subject matter jurisdiction, and lack of such jurisdiction is a defense
   which cannot be waived.”). Besides, we must raise the jurisdictional issue
   sua sponte if necessary. See Union Planters Bank Nat’l Ass’n v. Salih, 369 F.3d
   457, 460 (5th Cir. 2004) (“[F]ederal courts are duty-bound to examine the
   basis of subject matter jurisdiction sua sponte, even on appeal.”). We also
   recognize that gamesmanship is a two-way street, and, if the shoe were on the
   other foot, PNC might now be claiming non-consent based on its own initial
   refusal.   Accordingly, inferring consent under these facts would not
   categorically eliminate the possibility of gamesmanship under similar
   circumstances with a different posture in future cases.
          In any event, we have little concern of widespread inefficiency and
   gamesmanship because circumstances like these are bound to be quite
   infrequent. This case is an outlier. Generally, one party’s express refusal to
   consent is the end of the matter because, consistent with that refusal, the
   district court simply would not transfer the case to a magistrate judge.
   Hence, since Roell first permitted courts to infer consent from conduct
   almost two decades ago, implied consent cases in this and other circuits—
   with the apparent exception of Yeldon—have not involved any conflicting
   express statements of non-consent. Even here, given the district court’s
   insistence that it could not transfer this case to a magistrate judge absent
   Rude’s consent, we can safely assume that it would have done the same
   pursuant to PNC’s refusal had it not been operating under a faulty
   assumption caused by the erroneous docket entry.

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                                    No. 20-50255

                                       III.
          We are acutely mindful of the inefficiency and burden attending
   relitigating a case in circumstances like these, especially where the outcome
   on the merits may well have been the same had it emanated from a district
   judge instead. But ours is a court of limited jurisdiction, and we cannot resort
   to considerations of convenience and efficiency, albeit serious and legitimate
   ones, to exercise jurisdiction where we have none. See Kokkonen v. Guardian
   Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (“Federal courts are courts of
   limited jurisdiction.    They possess only that power authorized by
   Constitution and statute, which is not to be expanded by judicial decree.”)
   (internal citation omitted).
          For the foregoing reasons, the judgment of the magistrate judge is
   hereby VACATED and the case is REMANDED to the district court.
   The district court is instructed, upon remand, to either: (1) dispose of the
   summary judgment motions in the first instance; or (2) deem the magistrate
   judge’s order a report and recommendation and allow the parties to file
   objections thereto.

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