Court Opinion

ID: 5132910
Source: CourtListenerOpinion
Date Created: 2021-12-08 19:00:49.164593+00
Date Added: 2024-06-11T08:23:33.035173
License: Public Domain

Case: 21-20002     Document: 00516121713         Page: 1     Date Filed: 12/08/2021

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

                                                                                FILED
                                                                         December 8, 2021
                                  No. 21-20002                             Lyle W. Cayce
                                                                                Clerk

   Deutsche Bank National Trust Company, as trustee for
   Ameriquest Mortgage Securities Incorporated, Asset-
   Backed Pass-Through Certificates, Series 2004-R10,

                                                             Plaintiff—Appellee,

                                       versus

   Saihat Corporation,

                                                         Defendant—Appellant.

               Appeal from the United States District Court for the
                           Southern District of Texas
                            USDC No. 4:19-CV-825

   Before Higginbotham, Stewart, and Wilson, Circuit Judges.
   Per Curiam:*
          This case is a dispute over competing interests in a foreclosed
   property. The district court granted summary judgment to plaintiff Deutsche
   Bank National Trust Company (“Deutsche Bank”) after concluding that

          *
            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   opinion should not be published and is not precedent except under the limited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: 21-20002       Document: 00516121713            Page: 2      Date Filed: 12/08/2021

                                       No. 21-20002

   Deutsche Bank’s lien survived a prior foreclosure as a matter of Texas law
   and Deutsche Bank hence was entitled to foreclose against defendant Saihat
   Corporation (“Saihat”). We AFFIRM.
                                             I.
          Bryan Daniel purchased a property in 1998. Daniel financed his
   purchase with a loan and executed a deed of trust and a purchase money deed
   of trust in favor of Equity Secured Investments, Inc. The initial loan was paid
   off with a home equity loan in 2004 and the associated liens were released.
   The home equity loan was secured by a first lien security interest that was
   subsequently assigned to its current holder, Deutsche Bank.
          The property is located within a homeowners’ association in LaPorte,
   Texas. The HOA’s governing document requires homeowners to pay
   assessment fees and to reserve a vendor’s lien in favor of the HOA with the
   right to enforce through foreclosure. The HOA’s governing document also
   states that the HOA’s lien is “secondary, subordinate, and inferior to all
   liens, present and future given, granted and created by or at the instance and
   request of the Declarant and the Owner of any such lot . . . .” The governing
   document requires the HOA provide first mortgage lien holders with sixty
   days’ written notice of a foreclosure action.
          The Daniels later defaulted on their HOA fees and the HOA filed a
   foreclosure action in state court. Deutsche Bank was not a party to the state
   court action.1 Saihat bought the property at a constable’s sale following the
   foreclosure. Deutsche Bank then sued Saihat and the HOA. Deutsche Bank
   argued that its lien was senior to the HOA’s lien and therefore its lien
   survived the HOA’s foreclosure sale, making Saihat’s interest junior to

          1
             See Fairmont Park E. Homeowners Ass’n v. Martha Daniel, No. 201702032 (157th
   Dist. Ct. Harris County, Tex. Jan. 1, 2017).

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                                          No. 21-20002

   Deutsche Bank’s lien. Deutsche Bank further argued that it is permitted to
   foreclose on the property because the Daniels defaulted on their mortgage
   and, alternatively, the foreclosure sale to Saihat triggered an acceleration
   provision in the mortgage. Deutsche Bank’s claims against the HOA were
   dismissed without prejudice following an agreed judgment. Deutsche Bank
   then moved for summary judgment against Saihat.
          The district court granted summary judgment to Deutsche Bank on
   the basis that, regardless of the seniority of the liens, Deutsche Bank’s lien
   survived the HOA’s foreclosure. Without ruling as to the seniority of the
   liens, the district court held that if Deutsche Bank’s lien was junior, Deutsche
   Bank should have been joined to the HOA’s foreclosure action. As Deutsche
   Bank was not joined, its lien survived as a matter of Texas law. Alternatively,
   the district court held that Texas law requires an HOA to provide notice to
   junior liens of any delinquency prior to foreclosure. Thus, the district court
   concluded that either Deutsche Bank’s lien survived as the senior lien or it
   survived as a junior lien under Texas law due to the HOA’s failure to join or
   provide notice to Deutsche Bank. Saihat filed a motion for reconsideration,
   which the district court denied. Saihat then timely appealed.
                                                II.
          We review de novo a district court’s grant of summary judgment.2
   Summary judgment is proper “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.”3 “The moving party is entitled to a judgment as a matter of
   law because the nonmoving party has failed to make a sufficient showing on

          2
              Martin Res. Mgmt. Corp. v. AXIS Ins. Co., 803 F.3d 766, 768 (5th Cir. 2015).
          3
              Fed. R. Civ. P. 56(a).

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                                           No. 21-20002

   an essential element of her case with respect to which she has the burden of
   proof.”4
                                                III.
          As a threshold matter, Saihat argues that summary judgment was
   improper because the district court relied on facts and arguments first raised
   in Deutsche Bank’s reply brief in support of its motion for summary
   judgment. Deutsche Bank’s motion for summary judgment and Saihat’s
   response focused on the seniority of the liens. Deutsche Bank argued in its
   reply that its lien alternatively survived due to the HOA’s failure to join or
   notify Deutsche Bank to the foreclosure. However, Deutsche Bank had also
   stated this argument in its prior amended complaint.
          We have previously held that “Rule 56(c) merely requires the court
   to give the non-movant an adequate opportunity to respond prior to a
   ruling.”5 Here, Saihat was aware of the amended complaint and could have
   addressed its claims, knowing that the district court may consider materials
   not cited in the motion for summary judgment.6 Further, Saihat was
   permitted a sur-reply following Deutsche Bank’s reply which placed the
   HOA’s failure to join or give notice directly at issue. Saihat failed to address
   this argument in its sur-reply. Therefore Saihat was not prejudiced by
   Deutsche Bank’s failure to raise this issue in its initial motion for summary
   judgment.7 The district court’s reliance on arguments raised in Deutsche
   Bank’s amended complaint and reply was not improper.

          4
            Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks
   removed).
          5
              Jackson v. Widnall, 99 F.3d 710, 713 (5th Cir. 1996).
          6
              Fed. R. Civ. P. 56(c)(3).
          7
              Vais Arms, Inc. v. Vais, 383 F.3d 287, 292 (5th Cir. 2004).

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                                               IV.
           We review whether Deutsche Bank met its burden by identifying the
   basis for its motion and portions of the record which demonstrate the absence
   of a genuine issue of material fact.8 Deutsche Bank argued that its lien was
   senior under the terms of the HOA agreement or that its lien survived due to
   the HOA’s failure to join or give notice to Deutsche Bank. As to the first
   argument, Deutsche Bank provided the district court with the HOA’s
   governing document to establish its seniority. However, the district court did
   not rely on this argument, declining to rule on the seniority of the liens.
   Instead the district court relied on the HOA’s failure to join or give notice to
   Deutsche Bank.
           Texas law requires that a senior lienholder join junior lienholders to
   foreclosure proceedings; failure to do so results in the junior liens surviving
   the foreclosure.9 In its summary judgment order, the district court did not
   state what evidence it relied on in determining that the HOA failed to join
   Deutsche Bank in the foreclosure. However, the district court stated in its
   subsequent order denying Saihat’s motion for reconsideration that it had
   relied on the agreed judgment between Deutsche Bank and the HOA from
   the outset of litigation. In the agreed judgment, the HOA admitted that
   Deutsche Bank’s lien was superior and that the HOA failed to join Deutsche
   Bank to the previous foreclosure suit. Deutsche Bank argues that the agreed
   judgment amounts to a judicial admission that should withdraw the fact that

           8
               Celotex, 477 U.S. at 323.
           9
             Herbert v. Denman, 44 S.W.2d 441, 443 (Tex. Civ. App.—Texarkana 1931);
   McDonald v. Miller, 39 S.W. 89, 95–96 (Tex. 1897). See also Costello v. U.S. Bank Tr., N.A.,
   No. CV H-16-702, 2016 WL 5871459, at *4 (S.D. Tex. Oct. 7, 2016) aff’d sub nom. Costello
   v. U.S. Bank Tr., N.A. for LSF9 Master Participation Tr., 689 F. App’x 253, 256 (5th Cir.
   2017) (per curiam).

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   it was not joined from contention. But because judicial admissions are only
   binding against the party that made them, the agreed judgment only bound
   the HOA, not Saihat.10
           Nonetheless, this Court may take notice of a fact that is not subject to
   reasonable dispute and is capable of accurate and ready determination by
   resorting to sources whose accuracy cannot be reasonably questioned.11 Upon
   examination of the state court records, we take judicial notice of the fact that
   Deutsche Bank was not a party to the prior foreclosure action by the HOA
   against the Daniels.12 Thus, even if Deutsche Bank’s lien was junior to the
   HOA’s lien, it survived as a matter of Texas law.
           The district court held, in the alternative, that Deutsche Bank’s lien
   would survive because it was not given written notice of the HOA’s
   foreclosure proceedings as required by Texas Property Code § 209.0091.
   Section 209.0091 establishes prerequisites for a property owners’ association
   seeking foreclosure on an assessment lien. These requirements include
   providing notice of the delinquency giving rise to the property owners’
   association’s foreclosure to any other holder of a lien of record whose lien is
   inferior to the property owners’ association’s lien.13
           The HOA’s governing document also requires the HOA to give first
   lien holders written notice prior to foreclosure, consistent with the
   requirements of § 209.0091. Saihat has presented no evidence that the HOA

           10
                Martinez v. Bally’s Louisiana, Inc., 244 F.3d 474, 476 (5th Cir. 2001).
           11
           Gov’t of Canal Zone v. Burjan, 596 F.2d 690, 694 (5th Cir. 1979) (citing Fed. R.
   Evid. 201).
           12
                See Fairmont, No. 201702032.
           13
                Tex. Prop. Code § 209.0091(a)(1).

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   gave notice to Deutsche Bank.14 Saihat argues that Deutsche Bank has no
   proof that it did not receive notice. Saihat asks too much of Deutsche Bank;
   on summary judgment, it was Saihat’s burden to prove notice was given.15 As
   to Deutsche Bank’s argument that it should have received notice as a matter
   of Texas law, it has met its burden as the movant for summary judgment.
   Saihat failed to create a genuine issue of material fact as to whether notice
   was given to Deutsche Bank.16
            Having found that Deutsche Bank’s interest is superior to Saihat’s
   interest even if Deutsche Bank’s lien was junior to the HOA’s lien, we need
   not reach the issue of seniority.
                                                    V.
            Saihat also argues that Deutsche Bank had a statutory right of
   redemption under Texas Property Code § 209.011 and that Deutsche Bank’s
   failure to redeem forfeits its interest in the property. Deutsche Bank responds
   that this argument is waived. Saihat cited a statutory right to redeem in a
   supplemental response to Deutsche Bank’s motion for summary judgment.
   However, Saihat failed to preserve this argument for appeal.
            As we have held, if a litigant desires to preserve an argument
            for appeal, the litigant must press and not merely intimate the

            14
                 LSR Consulting, LLC v. Wells Fargo Bank, N.A., 835 F.3d 530, 534 (5th Cir.
   2016).
            15
                 Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
            16
               Saihat argues that Deutsche Bank was not entitled to notice based upon
   Hampshire v. Greeves, 143 S.W. 147 (Tex. 1912). However, Hampshire predates the
   legislation which set forth the § 209.0091 notice requirements by nearly a century. 2011
   Tex. Sess. Law Serv. Ch. 1282 (H.B. 1228). Further, Hampshire made clear that while a
   junior interest holder could not stop a senior interest holder from foreclosing, the rights of
   the junior interest holder are in no way affected by the judicial foreclosure to which it was
   not a party. Hampshire, 143 S.W. at 150.

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                                            No. 21-20002

          argument during the proceedings before the district court. If an
          argument is not raised to such a degree that the district court
          has an opportunity to rule on it, we will not address it on
          appeal.17
          At no point in its argument before the district court did Saihat argue
   that § 209.011 extinguished Deutsche Bank’s lien. Rather Saihat only recited
   portions of the statute and relied on § 209.011 to argue that Deutsche Bank
   was not owed notice. Absent an argument from Saihat that § 209.011
   extinguished Deutsche Bank’s lien, the district court had no opportunity to
   address it and no reason to consider the issue. Additionally, nothing in
   § 209.011 suggests that redemption is compulsory or would lead to a
   forfeiture of interest by another lienholder. Courts have repeatedly found
   that § 209.011 creates a right to redeem, not an affirmative duty.18 Further, it
   is unclear how Deutsche Bank could be expected to redeem without the
   notice required by § 209.0091. As Saihat waived its § 209.011 argument, we
   need not and do not address it further.
                                                 VI.
          The district court correctly held that there was no scenario in which
   Deutsche Bank did not have a superior interest to that of Saihat. Either
   Deutsche Bank’s lien was senior to the HOA lien or Deutsche Bank’s lien
   was junior but survived the HOA foreclosure action because the HOA failed
   to join or give notice to Deutsche Bank. We AFFIRM.

          17
               F.D.I.C. v. Mijalis, 15 F.3d 1314, 1327 (5th Cir. 1994).
          18
             DTND Sierra Invs., LLC v. Wells Fargo Bank, N.A., No. SA-12-CV-662-FB,
   2012 WL 12886605, at *4–5 (W.D. Tex. Aug. 13, 2012), DTND Sierra Invs. LLC v.
   CitiMortgage, Inc., No. SA-12-CV-80-XR, 2012 WL 1711738, at *7–8 (W.D. Tex. May 15,
   2012).

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