Court Opinion

ID: 2814392
Source: CourtListenerOpinion
Date Created: 2015-07-03 00:01:13.476032+00
Date Added: 2024-06-11T12:23:33.432584
License: Public Domain

Case: 14-11102      Document: 00513103791         Page: 1    Date Filed: 07/02/2015

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT

                                    No. 14-11102                         United States Court of Appeals
                                  Summary Calendar                                Fifth Circuit

                                                                                FILED
                                                                             July 2, 2015
RANDY WARREN,                                                              Lyle W. Cayce
                                                                                Clerk
              Plaintiff - Appellant

v.

MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,
INCORPORATED, as nominee for American Brokers Conduit; AMERICAN
BROKERS CONDUIT,

              Defendants - Appellees

                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 3:13-CV-4185

Before REAVLEY, DENNIS, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
       Randy Warren appeals the dismissal of his claims against Mortgage
Electronic Registration Systems, Inc. (“MERS”) and American Brokers
Conduit (“ABC”) arising out of the attempted foreclosure of his property.
Because Warren’s claims are barred by res judicata, we AFFIRM.

       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
    Case: 14-11102     Document: 00513103791      Page: 2    Date Filed: 07/02/2015

                                  No. 14-11102
                 FACTUAL AND PROCEDURAL BACKGROUND
      This is the third in a series of three lawsuits Warren has filed in an
attempt to avoid foreclosure of his home located in Dallas, Texas. Because this
court has already addressed Warren’s claims on two prior occasions, we will
only briefly summarize the relevant factual and procedural history.             See
Warren v. Bank of Am., N.A., 566 F. App’x 379 (5th Cir. 2014) (“Warren I”);
Warren v. Bank of Am., N.A., No. 3:13-CV-1135-M, 2014 WL 1315855 (N.D.
Tex. Mar. 27, 2014), summarily aff’d, No. 14-10540 (5th Cir. July 15, 2014)
(“Warren II”).
      Warren purchased the property in 2006 by obtaining a home-equity loan
from ABC. He signed a promissory note in the principal amount of $255,200,
which he secured by executing a deed of trust. The deed of trust named ABC
as the lender, identified MERS as the nominee for the lender, and granted
MERS the right to exercise any or all of the interests Warren granted in the
deed of trust. In December 2008, MERS assigned the deed of trust to Bank of
America, N.A.’s predecessor in interest, BAC Home Loans Servicing, L.P. 1
When Warren later defaulted on the note, Bank of America attempted to
foreclose.
      Warren then started filing a series of lawsuits. First, Warren sued Bank
of America in December 2011 in state court. Among other things, Warren
alleged that MERS had no right to assign the note or deed of trust because it
was not a party to, and never had a beneficial interest in, the note. Bank of
America removed the case to the United States District Court for the Northern
District of Texas and moved to dismiss the complaint for failure to state a claim
under Federal Rule of Civil Procedure 12(b)(6). The district court granted

      1At the time the deed of trust was assigned, BAC was known as Countrywide Home
Loans Servicing, L.P.
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                                   No. 14-11102
Bank of America’s motion, dismissing Warren’s claims with prejudice. We
affirmed.
        In March 2013, while Warren I was still pending, Warren filed another
lawsuit against Bank of America in state court. This time, he alleged: (1) a
violation of the Texas Constitution’s loan-to-value provision, (2) claims for
wrongful foreclosure, and (3) violations of state and federal debt collection
laws. Bank of America again removed the case to the Northern District of
Texas and filed a motion to dismiss under Rule 12(b)(6) for failure to state a
claim. The district court granted the motion, again dismissing Warren’s claims
with prejudice. Warren appealed and Bank of America filed a motion for
summary affirmance on res judicata grounds, which this court granted in July
2014.
        In September 2013, Warren filed the current lawsuit in state court
against MERS and ABC. ABC was apparently never served and has never
appeared in the case. Warren again challenged MERS’s ability to assign the
note and deed of trust and again alleged that the loan violated the Texas
Constitution’s loan-to-value provision. He also contended that no party had
the ability to foreclose and sought a declaration that the deed of trust was
invalid and unenforceable. As in the two previous suits, the case was removed
to the Northern District of Texas. MERS filed a motion to dismiss, arguing
that Warren’s claims were barred by res judicata or, in the alternative, that
Warren had failed to state a claim to relief. The district court granted MERS’s
motion. The court declined to address MERS’s res judicata argument, and
instead addressed the merits of Warren’s claims. Warren appeals.

                                  DISCUSSION
        “We review a district court’s grant of a motion to dismiss de novo.” Hasse
v. Countrywide Home Loans, Inc., 748 F.3d 624, 630 (5th Cir. 2014) (citation
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                                  No. 14-11102
omitted). “[W]e are not restricted to ruling on the district court’s reasoning,
and may affirm a district court’s grant of a motion to dismiss on a basis not
mentioned in the district court’s opinion.” Gulf Guar. Life Ins. Co. v. Conn.
Gen. Life Ins. Co., 304 F.3d 476, 486 (5th Cir. 2002) (citations and quotations
omitted). Because we conclude res judicata is the most significant of the issues
before us, we will resolve the case on that basis.
      “Claim preclusion, or pure res judicata, is the venerable legal canon that
[e]nsures the finality of judgments and thereby conserves judicial resources
and protects litigants from multiple lawsuits.” United States v. Shanbaum, 10
F.3d 305, 310 (5th Cir. 1994) (citation and internal quotations omitted).
“Under res judicata, a final judgment on the merits of an action precludes the
parties or their privies from relitigating issues that were or could have been
raised in that action.” Oreck Direct, LLC v. Dyson, Inc., 560 F.3d 398, 401 (5th
Cir. 2009) (citation and quotations omitted). For res judicata to apply, four
conditions must be satisfied: (1) the parties to both actions are identical, or in
privity; (2) a court of competent jurisdiction rendered the judgment in the first
action; (3) the first action concluded with a final judgment on the merits; and
(4) both suits involved the same claim or cause of action. Procter & Gamble
Co. v. Amway Corp., 376 F.3d 496, 499 (5th Cir. 2004) (citation omitted).
      Here, all four conditions are satisfied. First, though MERS was not a
party to Warren I or Warren II, it is in privity with Bank of America, the
defendant in both prior suits. Though, generally, preclusion does not apply to
nonparties, there are important exceptions to this rule. See Taylor v. Sturgell,
553 U.S. 880, 892–93 (2008).      For example, “nonparty preclusion may be
justified based on a variety of pre-existing substantive legal relationships
between the person to be bound and a party to the judgment.” Id. at 894
(citation and internal quotations omitted). “Qualifying relationships include,
but are not limited to, preceding and succeeding owners of property . . . and
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assignee and assignor.” Id. (citation omitted). In a recent unpublished opinion
which we find persuasive, we relied on Taylor to hold that the legal
relationship between MERS, the deed of trust beneficiary, and the mortgagee
bank that was the defendant in the mortgagor’s prior lawsuit was sufficient to
satisfy the privity requirement. See Maxwell v. U.S. Bank Nat. Ass’n, 544 F.
App’x 470, 473 (5th Cir. 2013). Like in Maxwell, MERS and Bank of America
are sufficiently related to satisfy the first res judicata requirement. With
regard to the second element, there is no dispute that the decisions of the
district courts in Warren I and Warren II constitute judgments rendered by a
court of competent jurisdiction.
       Third, the decisions in Warren I and Warren II were final judgments on
the merits. For purposes of res judicata, a “dismissal for failure to state a claim
under Federal Rule of Civil Procedure 12(b)(6) is a judgment on the merits.”
Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 399 n.3 (1981) (citations
and internal quotations omitted). 2
       Finally, this suit involves the same claim or cause of action as Warren I
and Warren II. This court uses the transactional test to determine whether
two suits involve the same claim or cause of action. See United States v.
Davenport, 484 F.3d 321, 326 (5th Cir. 2007) (citation omitted). This test
requires us to consider whether the two cases are based on “the same nucleus
of operative facts.” Id. (citation and quotations omitted). “The nucleus of
operative facts, rather than the type of relief requested, substantive theories
advanced, or types of rights asserted, defines the claim.” Id. (citation omitted).
If both cases are based on the same nucleus of operative facts, “the prior

       2 Warren argues that dismissals for want of jurisdiction are not decisions on the merits
for res judicata purposes. Warren is correct that a jurisdictional dismissal is insufficient to
serve as a final judgment on the merits, but that exception does not apply here because
Warren I and Warren II involved dismissals for failure to state a claim and not for want of
jurisdiction. See Oreck, 560 F.3d at 401 & n.2.
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                                     No. 14-11102
judgment’s preclusive effect extends to all rights the original plaintiff had with
respect to all or any part of the transaction, or series of connected transactions,
out of which the original action arose.” Id. (citation and internal quotations
omitted).
       Warren contends that the fourth element is not satisfied because he has
raised legal claims that were not raised in the two prior suits. Raising new
claims, though, does not allow Warren to avoid the preclusive effects of the
prior judgments. Even with new claims, this case is based on the same nucleus
of operative facts as Warren I and Warren II. Each of the suits is based on the
same loan that Warren obtained in 2006. Both of the prior suits challenged
MERS’s assignment of the loan to Bank of America. And Warren raised the
same constitutional argument in the second suit that he raises now. Though
Warren has also raised various other claims, they arise from the same nucleus
of operative facts and thus could have, and should have, been asserted in the
prior suits. 3
       AFFIRMED.

       3   All pending motions are DENIED.
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