Court Opinion

ID: 6345987
Source: CourtListenerOpinion
Date Created: 2022-06-02 00:00:19.293016+00
Date Added: 2024-06-11T09:13:11.028021
License: Public Domain

Case: 21-40383     Document: 00516340298          Page: 1    Date Filed: 06/01/2022

              United States Court of Appeals                              United States Court of Appeals

                   for the Fifth Circuit
                                                                                   Fifth Circuit

                                                                                 FILED
                                                                              June 1, 2022
                                                                            Lyle W. Cayce
                                   No. 21-40383                                  Clerk

   The Bank of New York Mellon, formerly known as The Bank
   of New York as Trustee of the Registered Holders of
   CWABS, Incorporated, Asset-Backed Certificates,
   Series 2004-5,

                                                             Plaintiff—Appellee,

                                       versus

   Floyd Riley; Sonia Riley,

                                                        Defendants—Appellants.

                  Appeal from the United States District Court
                       for the Eastern District of Texas
                            USDC No. 1:19-CV-279

   Before Jones, Southwick, and Oldham, Circuit Judges.
   Per Curiam:*
          The Bank of New York Mellon sued Floyd and Sonia Riley after the
   Rileys allegedly failed to abide by a settlement agreement that arose out of a

          *
            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   opinion should not be published and is not precedent except under the limited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.
Case: 21-40383      Document: 00516340298          Page: 2   Date Filed: 06/01/2022

                                    No. 21-40383

   foreclosure proceeding. The district court granted summary judgment in
   favor of the Bank, and the Rileys appeal. We AFFIRM.
           FACTUAL AND PROCEDURAL BACKGROUND
          On April 22, 2004, Floyd and Sonia Riley borrowed $104,000 from
   the Bank of New York Mellon (“the Bank”) to refinance real property in
   Beaumont, Texas. They executed a promissory note and deed of trust that
   pledged the Beaumont property as collateral for the loan. In 2010, the Rileys
   stopped making required payments on their loan, and the Bank filed an
   application to initiate foreclosure proceedings. On July 24, 2013, a Texas
   state court issued an order that allowed the Bank to proceed with foreclosure.
          In 2014, the Rileys sued the Bank in state court to challenge the 2013
   foreclosure order. The lawsuit was resolved in 2016 through a settlement
   agreement. As part of the settlement agreement, the Rileys agreed to the
   Bank “proceeding with a consent or non-judicial foreclosure” and to “waive
   any and all rights and defenses they may have to challenge or contest said
   foreclosure including, but not limited to, any claims or defenses contesting
   their default under the Note or Deed of Trust or contesting the validity of the
   foreclosure process or sale.” The lawsuit was dismissed. The Bank then
   filed for an expedited foreclosure proceeding under Texas Rule of Civil
   Procedure 736 to obtain a current court order for non-judicial foreclosure as
   required by the Texas Constitution.         See Tex. Const. art. XVI,
   § 50(a)(6)(D).    The Rileys filed an answer to the Bank’s expedited
   foreclosure application that denied the allegations in the application and
   asserted various defenses.
          The state court conducted a hearing on the Bank’s foreclosure
   application. The court denied the Bank’s application because the court
   found there were contested facts at issue and found a traditional lawsuit
   would be necessary to obtain foreclosure. So, in 2018, the Bank filed a lawsuit

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   seeking foreclosure. The only relief the Bank sought was foreclosure of the
   Riley’s deed of trust. The Bank later explained that the counsel that pursued
   this lawsuit was unaware of the 2016 settlement agreement when advancing
   this suit.   The Rileys did not identify the existence of the settlement
   agreement during this lawsuit’s proceedings either.
          The state court granted summary judgment for the Rileys in the 2018
   lawsuit on the basis that the Bank’s claim was barred by the statute of
   limitations. The Bank appealed this ruling to the Texas Court of Appeals and
   that court reversed, holding there were issues of material fact as to whether
   its claim was outside the statute of limitations. The case was then placed in
   abeyance pending the resolution of the case that is now before us on this
   appeal.
          In 2019, the Bank filed this case in the United States District Court,
   Eastern District of Texas while state court proceedings were ongoing. In its
   complaint, the Bank alleged the Rileys breached the 2016 settlement
   agreement, defrauded the Bank, engaged in negligent misrepresentation, and
   that the Bank was entitled to return of its settlement payment. All of the
   Bank’s claims were based on the Rileys’ alleged breach of the settlement
   agreement, specifically that they attempted to prevent foreclosure and in
   asserting defenses against the Bank after it filed for foreclosure in state court
   in 2016.
          The district court granted summary judgment to the Bank on its claim
   that the Rileys breached the settlement agreement. The Bank then moved
   for partial dismissal of its remaining causes of action. The district court
   dismissed those claims. The district court then entered final judgment,
   which authorized the Bank to foreclose on the Rileys’ lien. The Rileys timely
   appealed.

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                                  DISCUSSION
          The Rileys, who are pro se on this appeal as they also were in district
   court, make numerous arguments for reversal. We consider the jurisdictional
   arguments first, then we will analyze the remainder.
   I.     Standing
          The Rileys argue that the district court erred in finding that the Bank
   had standing. “Standing is a question of law that we review de novo.” In re
   Technicool Sys., Inc., 896 F.3d 382, 385 (5th Cir. 2018). A federal courts’
   jurisdiction extends only to actual “cases or controversies.” Whitemore v.
   Arkansas, 495 U.S. 149, 154–55 (1990). To establish standing, the plaintiff
   must show he or she “(1) suffered an injury in fact, (2) that is fairly traceable
   to the challenged conduct of the defendant, and (3) that is likely to be
   redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S.
   330, 338 (2016) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61
   (1992)).   The party invoking federal jurisdiction bears the burden of
   establishing standing. Lujan, 504 U.S. at 561.
          The Rileys first argue the Bank has not shown it suffered an injury in
   fact. The Rileys rely on a state court order that the Bank received in 2017
   that recognized its right to foreclose. That order, though, became ineffective
   because the court held on reconsideration that the Rileys had not received
   proper notice of the hearing that had led to that order. Even if, as alleged by
   the Rileys, there were defects in the vacating of the 2017 order that might
   make it still in effect, the issue in the case here is whether the Bank suffered
   an economic injury when the Rileys breached the 2016 settlement agreement.
   We hold that it did, as that breach deprived the Bank of the “benefit of the
   bargain” it was due as a result of making the agreement to settle the 2014
   lawsuit. Cole v. Gen. Motors Corp., 484 F.3d 717, 723 (5th Cir. 2007).
   Plaintiffs seeking recovery for “actual economic harm (e.g., overpayment,

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   loss in value, or loss of usefulness) emanating from the loss of their benefit of
   the bargain” is a sufficient injury for standing. Id.
          The Rileys further argue the Bank had no injury because it never
   actually paid the Rileys anything for the settlement agreement. The Bank’s
   general allegations of injury sufficed. The argument also fails as a reason to
   have granted summary judgment to the Bank. Their answer admitted that
   the Bank paid them their contractually entitled sum.              Such “factual
   assertions in pleadings and pretrial orders are considered to be judicial
   admissions conclusively binding on the party who made them.” White v.
   ARCO/Polymers, Inc., 720 F.2d 1391, 1396 (5th Cir. 1983). The district court
   therefore did not err in its conclusion that all parties agree the Bank tendered
   performance, and therefore the Bank could establish injury.
          The district court did not err in finding the Bank sufficiently
   established standing.
   II.    Diversity Jurisdiction
          The Rileys argue that the Bank failed to establish diversity jurisdiction
   because its damages did not exceed $75,000. District courts have diversity-
   of-citizenship jurisdiction when a lawsuit involves citizens of different states
   and “the matter in controversy exceeds the sum or value of $75,000,
   exclusive of interest and costs.” 28 U.S.C. § 1332(a). The party seeking to
   invoke federal diversity jurisdiction has the burden to establish both of those
   requirements. Garcia v. Koch Oil Co. of Tex. Inc., 351 F.3d 636, 638 (5th Cir.
   2003). “Where the plaintiff has alleged a sum certain that exceeds the
   requisite amount in controversy, that amount controls if made in good faith.”
   Allen v. R & H Oil & Gas Co., 63 F.3d 1326, 1335 (1995). When a specific sum
   is alleged, a court may only dismiss for jurisdiction if “it . . . appear[s] to a
   legal certainty that the claim is really for less than the jurisdictional amount.”
   Id. (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288

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   (1938)). If the plaintiff fails to specify damages, the party seeking federal
   jurisdiction must show by a preponderance of the evidence the amount-in-
   controversy requirement is satisfied. Id.
          Here, the Bank identifies a specific amount, stating it “seeks damages
   greater than $150,000.” The Rileys contend, though, that the Bank is only
   entitled to the amount it paid in settlement, which does not exceed $75,000;
   and therefore, the Bank cannot meet the amount-in-controversy
   requirement. The Bank responds that it is entitled to damages that account
   for “the benefit of the bargain” in the settlement agreement, which would
   also include the value of the Beaumont property and thus reach the $150,000
   claimed in its complaint.
          The law governing which damages are recoverable is substantive, so
   we apply Texas law. See Homoki v. Conversion Servs., Inc., 717 F.3d 388, 396
   (5th Cir. 2013). “Benefit of the bargain damages are the very essence of a
   breach of contract action and are recoverable under [] Texas . . . contract
   law.” Coghlan v. Wellcraft Marine Corp., 240 F.3d 449, 453 (5th Cir. 2001).
   Such damages are intended to “place the injured party as nearly as possible
   in the position that he would have occupied had the defaulting party
   performed the contract.” Id. at 454.
          In this case, the contract stipulated that the Rileys were to turn over
   the property to the Bank. Accordingly, the benefit-of-the-bargain damages
   includes the value of the property because the value of the property captures
   the expected value of the contract. See, e.g., Bowen v. Robinson, 227 S.W.3d
   86, 97–98 (Tex. App.—Hous. [1st Dist.] 2006, pet. denied). The district
   court found the value of the property was $159,580.00 in 2019. Therefore,
   in breaching the contract, the Bank was denied a benefit of the bargain that
   exceeded the requisite amount in controversy, $75,000. The district court

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   therefore did not err in concluding the Bank established diversity of
   citizenship jurisdiction.
   III.   Res Judicata — Claim Splitting
          The Rileys next raise a res judicata argument. They argued on
   summary judgment and again on appeal that the Bank should not be granted
   summary judgment because it lacks subject-matter jurisdiction. Specifically,
   the Rileys argue that the Bank improperly split its claims between the 2018
   state lawsuit and the 2019 federal lawsuit.
          The prohibition on claim splitting is a principle based in res judicata.
   In re Super Van Inc., 92 F.3d 366, 371 (5th Cir. 1996). Whether a claim is
   barred by res judicata is a question of law reviewed de novo. See Gulf Island-IV,
   Inc. v. Blue Streak-Gulf Is Ops, 24 F.3d 743, 746 (5th Cir. 1994). Claim
   splitting occurs when a plaintiff splits “a single cause of action or claim” by
   “advancing one part in an initial suit and attempting to reserve another part
   for a later suit.” Texas Emps.’ Ins. Ass’n v. Jackson, 862 F.2d 491, 501 (5th
   Cir. 1988) (en banc). The purpose behind the claim-splitting rule “is to
   protect the defendant from being harassed by repetitive actions based on the
   same claim.” In re Super Van Inc., 92 F.3d at 371. A plaintiff therefore can
   only bring a second action on the same cause of action if the parties have
   agreed to the plaintiff splitting its claims. Id.
          To determine whether two claims constitute the same claim or cause
   of action, we apply the “transactional test.” Ocean Drilling & Expl. Co., Inc.
   v. Mont Boat Rental Servs., Inc., 799 F.2d 213, 217 (5th Cir. 1986). The critical
   question in applying the transactional test is “whether the two actions were
   based on the same nucleus of operative facts.” Eubanks v. F.D.I.C., 977 F.2d
   166, 171 (5th Cir. 1992) (quotation marks and citations omitted); see also
   Jackson v. U.S. Postal Serv., 799 F.2d 1018, 1021 (5th Cir. 1986) (applying
   transactional test in claim-splitting analysis). This means we evaluate the

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   “factual predicate of the claims asserted, not the legal theories upon which
   the plaintiff relies.” Eubanks, 977 F.2d at 171.
          For example, in Jackson we held that an action for ejectment and an
   action to recover reasonable rental value constituted the same claim because
   “the wrong to be corrected” was the same in both actions. Jackson, 799 F.2d
   at 1021. The Jackson plaintiffs first sued the United States Postal Service
   (“USPS”) to retake post office premises after the USPS breached its lease.
   Id. at 1019–20. The plaintiffs later sued the USPS to recover reasonable
   rental value for the period of nonpayment. Id. The court explained that
   despite the plaintiffs seeking different remedies, the “wrong to be corrected”
   was the same in both suits and therefore both claims “arose from the same
   ‘series of connected transactions.’”          Id. at 1021 (quoting Restatement
   (Second) of Judgments § 24 (Am. L. Inst. 1982)). The claims could therefore
   not be split into two actions. Id.
          Unlike the plaintiffs in Jackson, the Bank’s two suits involve different
   wrongs. The central transaction in the first suit was related to the Rileys’
   deed of trust and the Bank’s efforts to enforce that deed of trust and foreclose
   on the Beaumont property. The second action, on the other hand, involved
   a different transaction, as it focused on a settlement agreement between the
   parties and the Rileys’ subsequent breach of that agreement. There are two
   different legal wrongs underlying each of these occurrences — failure to
   make required payments on a loan and breach of a contract — and under the
   transactional test, two claims have the same identity only where the same
   transaction is the source of the claim in both suits. See In re Howe, 913 F.2d
   1138, 1144-45 (5th Cir. 1990). The two claims here thus cannot be considered
   the same. The Bank therefore did not engage in improper claim splitting
   when bringing two separate suits.

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   IV.    Summary Judgment
          The Rileys next challenge the district court’s grant of summary
   judgment. “We review a district court’s grant of summary judgment de novo,
   applying the same standard as the district court.” Haverda v. Hays Cnty., 723
   F.3d 586, 591 (5th Cir. 2013). Summary judgment may be granted only “if
   the movant shows that there is no genuine dispute as to any material fact and
   the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
   56(a). We review all facts “in the light most favorable to the non-movant.”
   Price v. Fed. Express Corp., 283 F.3d 715, 719 (5th Cir. 2002).
          The Rileys argue material issues of fact remain as to the meaning of
   the settlement agreement. Specifically, they say the contract’s language was
   ambiguous as to whether the Bank could proceed with any type of foreclosure
   or whether it could only execute a non-judicial foreclosure and as to whether
   the Bank could attempt to foreclose multiple times. They derive these
   arguments from the following section of the settlement agreement:
          Plaintiffs hereby consent to Defendants . . . proceeding with a
          consent or non-judicial foreclosure. Plaintiffs expressly waive
          any and all rights and defenses they may have to challenge or
          contest said foreclosure including, but not limited to, any
          claims or defenses contesting their default under the Note or
          Deed of Trust or contesting the validity of the foreclosure
          process or sale.
          Interpreting a contract is a legal issue, which means our review of a
   district court’s interpretation is de novo. Gonzalez v. Denning, 394 F.3d 388,
   392 (5th Cir. 2004). In a diversity case, we apply state law for the principles
   of contract interpretation. See id.
          Under Texas law, “[w]hether a contract is ambiguous is a question of
   law for the court to decide by looking at the contract as a whole in light of the
   circumstances present when the contract was entered.” Coker v. Coker, 650

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   S.W.2d 391, 394 (Tex. 1983). When interpreting a contract, “the primary
   concern of the court is to ascertain the true intentions of the parties as
   expressed in the instrument.” Id. at 393. All parts of the contract should be
   read together and “such meaning shall be given to them as will carry out and
   effectuate to the fullest extent the intention of the parties.” Great Am. Indem.
   Co. v. Pepper, 339 S.W.2d 660, 661 (1960). Terms in the contract are given
   their “plain grammatical meaning” unless such meaning would plainly defeat
   the parties’ intentions. Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 529
   (Tex. 1987).
          Texas courts consider a contract ambiguous where “it is reasonably
   susceptible to more than one meaning, in the light of the surrounding
   circumstances and after applying established rules of construction.” Watkins
   v. Petro-Search, Inc., 689 F.2d 537, 538 (5th Cir. 1982). “An ambiguity does
   not arise simply because the parties offer conflicting interpretations.”
   American Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex. 2003).
   Whether a contract is ambiguous is a question of law for the court to decide.
   Coker, 650 S.W.2d at 393. If the contract is ambiguous, then the district court
   cannot grant summary judgment and the interpretation of the contract
   becomes a fact issue. Id.
          The language identified by the Rileys unambiguously reads as
   contemplating that the Bank would proceed with one of two types of
   foreclosures, either a consent foreclosure or a nonjudicial foreclosure.
   Moreover, the intent of the agreement was for the Rileys to turn over the
   property to the Bank upon payment of the agreed sum. That intent was
   exemplified in the provision the Rileys identify that shows they agreed not to
   contest foreclosure or interfere with proceedings. Reading the contract as a
   whole, and especially considering this underlying intent, its meaning is not
   ambiguous as to whether the Bank may obtain either of the two types of
   foreclosures listed and should be able to obtain foreclosure as a result of the

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   agreement. The district court therefore did not err in granting summary
   judgment to the Bank.
   V.     Due Process
          Finally, the Rileys argue the district court denied them due process of
   law as guaranteed by the Fourteenth Amendment. The denial allegedly
   occurred when the district court denied the Rileys’ motion to compel a
   deposition of the Bank’s corporate representative. The district court denied
   this request because the Rileys failed to comply with the requirement in the
   discovery rules to “describe with reasonable particularity the matters for
   examination” for requesting to depose a corporation. Fed. R. Civ. P.
   30(b)(6).
          We review a district court’s ruling on discovery matters, such as a
   motion to compel, for abuse of discretion. Atkinson v. Denton Pub. Co., 84
   F.3d 144, 147 (5th Cir. 1996). A district court abuses its discretion if it bases
   its decision “on an erroneous view of the law or on a clearly erroneous
   assessment of the evidence.” Esmark Apparel, Inc. v. James, 10 F.3d 1156,
   1163 (5th Cir. 1994).
          In their motion to compel, the Rileys failed to explain the matters to
   be examined in a deposition of the Bank’s corporate representative. Instead,
   the request was made summarily at the conclusion of a motion to compel that
   was primarily about compelling interrogatories.         Rule 30(b)(6) governs
   deposing corporations, and that is the discovery the Rileys were seeking. The
   Rileys say they were seeking to depose a person, not a corporation, and
   therefore did not need to provide a particularized reason for the deposition.
   It is correct that if their motion had been granted, they would be deposing a
   person, but they requested to depose someone who represents the Bank — a
   corporation. This request fits squarely within Rule 30(b)(6)’s scope. The

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   district court therefore did not abuse its discretion in denying the Riley’s
   motion to compel.
          As for the Rileys’ due process argument, “[a] summary judgment
   reached in accordance with Federal Rule of Civil Procedure 56 . . . satisfies
   the requirements of due process.” Hill v. McDermott, Inc., 827 F.2d 1040,
   1044 (5th Cir. 1987). Rule 56 does not require that discovery occur at all
   before summary judgment is granted. Washington v. Allstate Ins. Co., 901
   F.2d 1281, 1285 (5th Cir. 1990). If a party cannot defend the motion
   sufficiently without discovery, the party must turn to Federal Rule of Civil
   Procedure 56(d) as a remedy to be able to proceed with discovery. See id.
   Rule 56(d) allows a party to file affidavits to show why discovery is essential
   to its opposition to the summary judgment motion. The court may still deny
   the motion, but Rule 56(d) serves as a procedural safeguard for parties who
   believe they cannot sufficiently defend a summary judgment motion.
   American Fam. Life Assurance Co. of Columbus v. Biles, 714 F.3d 887, 893–94
   (5th Cir. 2013).
          The Rileys did not file any motion that we could construe as
   attempting to show as a Rule 56(d) motion. See Grant v. Cuellar, 59 F.3d 523,
   524 (5th Cir. 1995) (explaining we liberally construe pro se parties’
   arguments). “[O]ne who fails to take advantage of procedural safeguards
   available to him cannot later claim that he was denied due process.”
   Browning v. City of Odessa, 990 F.2d 842, 845 n.7 (5th Cir. 1993). The Rileys
   failed to take advantage of such procedural safeguards. For this reason and
   the fact that the district court did not err in denying their discovery motion,
   the district court did not violate the Rileys’ due process rights.
          AFFIRMED.

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