Court Opinion

ID: 4575184
Source: CourtListenerOpinion
Date Created: 2020-10-09 18:00:22.208722+00
Date Added: 2024-06-11T13:31:54.861084
License: Public Domain

Case: 19-40158     Document: 00515595989          Page: 1     Date Filed: 10/09/2020

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

                                                                               FILED
                                                                         October 9, 2020
                                   No. 19-40158                           Lyle W. Cayce
                                                                               Clerk

   John Priester, Jr.; Bettie Priester,

                                                            Plaintiffs—Appellants,

                                       versus

   Deutsche Bank National Trust Company; Select
   Portfolio Servicing, Incorporated,

                                                         Defendants—Appellees.

                  Appeal from the United States District Court
                       for the Eastern District of Texas
                            USDC No. 4:16-CV-449

   Before Graves, Costa, and Engelhardt, Circuit Judges.
   Per Curiam:*
          Appellants John and Bettie Priester (“the Priesters”) obtained a home
   equity loan secured by a first lien on their residence in 2005. They stopped
   making payments on the loan about five years later, and a decade of litigation
   followed, engendering two previous opinions from this court. See Priester v.

          *
            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   opinion should not be published and is not precedent except under the limited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.
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                                          No. 19-40158

   JP Morgan Chase Bank, N.A., 927 F.3d 912, 913-14 (5th Cir. 2019); Priester v.
   JP Morgan Chase Bank, N.A., 708 F.3d 667, 674 (5th Cir. 2013). The
   Priesters commenced this suit in state court, seeking a declaratory judgment
   that Appellees Deutsche Bank National Trust Company (“Deutsche Bank”)
   and Select Portfolio Servicing, Inc. (“Select Portfolio”) could not foreclose
   on their property because the loan and security instrument were void under
   the Texas Constitution. They also asserted claims for defamation, fraudulent
   concealment, fraud by non-disclosure, common-law fraud, negligent
   misrepresentation, breach of contract, and violations of the Texas Debt
   Collection Practices Act (“TDCPA”). Asserting diversity jurisdiction,
   Deutsche Bank and Select Portfolio removed the case to federal court and
   brought counterclaims for judicial foreclosure and equitable subrogation.
   Following a spate of motion practice and a bench trial, the district court
   entered final judgment dismissing the Priesters’ claims and allowing the
   foreclosure to proceed. We AFFIRM.
                                              I.
           In November 2005, the Priesters obtained a home equity loan from
   Long Beach Mortgage Company (“Long Beach”), encumbering their
   property in the amount of $180,000. 1 Under Texas law, borrowers execute
   two documents—each of which is a distinct obligation creating a right of
   foreclosure—to obtain a home equity loan: “(1) a promissory note that
   creates the borrower’s legal obligation to repay the lender, and (2) a deed of
   trust that grants the lender a lien on the property as security for the debt.”

           1
            Long Beach later merged into Washington Mutual Bank, and JP Morgan Chase
   Bank, N.A. (“JP Morgan”) subsequently acquired all of Washington Mutual Bank’s assets.
   Eventually, JP Morgan transferred the deed of trust to Deutsche Bank, and Select Portfolio
   is the current servicer of the loan.

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   Harris Cty. Tex. v. MERSCORP Inc., 791 F.3d 545, 549 (5th Cir. 2015). The
   Priesters, on the same day as closing, also signed an affidavit stating, in
   relevant part, that they had signed the loan documents at the office of an
   attorney, the lender, or a title company as required by the Texas Constitution
   and that they had received notice concerning extensions of credit as required
   by Section 50(a)(6) of the Texas Constitution. A notary public present when
   the Priesters signed the affidavit later testified at trial in this litigation that
   she gave them time to read the document, although they declined to read its
   entirety, and that she explained it to them but did not detail every line. Five
   years after executing the loan, the Priesters asserted—for the first time and
   contrary to their affidavit—that they did not receive the required notice
   twelve days prior to closing and that they signed the loan in their home rather
   than in one of the constitutionally designated places.
          The Priesters stopped making payments on their loan in 2010,
   contending that its origination violated the Texas Constitution. Litigation
   ensued with JP Morgan, which was then the lienholder, ultimately reaching
   this court.    Making an Erie guess, we concluded that the Priesters’
   constitutional claim was barred by the statute of limitations. Priester v. JP
   Morgan Chase Bank, N.A., 708 F.3d 667, 674 (5th Cir. 2013). Three years
   later—as, regrettably, sometimes happens—our guess turned out to be
   wrong when the Supreme Court of Texas interpreted Texas law differently
   and declined to apply the limitation period to the constitutional provision.
   Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542, 547 (Tex. 2016); see also
   Alexander v. Wells Fargo Bank, N.A., 867 F.3d 593, 600 (5th Cir. 2017)
   (noting that “Wood made plain that our ‘Erie guess’ in Priester was wrong”).
   On the same day it entered the decision in Wood, the Supreme Court of Texas
   also issued its ruling in Garofolo v. Ocwen Loan Servicing, L.L.C., holding that
   Section 50(a) of the Texas Constitution creates a defense to foreclosure but
   does not give rise to an independent cause of action. 497 S.W.3d 474, 478

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   (Tex. 2016). More than a year after those decisions, the Priesters filed a Rule
   60(b)(6) motion to vacate the final judgment dismissing their claims. The
   district court denied that motion and, in the interest of finality, we affirmed.
   Priester v. JP Morgan Chase Bank, N.A., 927 F.3d 912, 913-14 (5th Cir. 2019).
          In the meantime, JP Morgan assigned the obligation to Deutsche Bank
   and Deutsche Bank obtained a state court order permitting it to proceed with
   foreclosure. Attempting to stop enforcement of the foreclosure order, the
   Priesters commenced this litigation by initiating a separate proceeding in
   state court—naming as defendants Deutsche Bank, Select Portfolio, and
   several other defendants. Deutsche Bank and Select Portfolio asserted
   diversity jurisdiction to remove the case to federal court, claiming that the
   other (non-diverse) defendants should be disregarded for diversity
   jurisdiction purposes because they were improperly joined, and brought
   counterclaims for judicial foreclosure and, alternatively, equitable
   subrogation. The Priesters then filed two motions aimed at returning the
   case to state court. First, they moved to remand, averring that the district
   court lacked diversity jurisdiction because the notice of removal did not
   sufficiently plead improper joinder and the non-diverse defendants were
   proper parties. Adopting a report and recommendation from the magistrate
   judge, the district court denied the motion to remand and dismissed the non-
   diverse defendants.     Second, unsuccessful in obtaining a remand, the
   Priesters filed a motion for abstention, contending that the district court
   should refrain from exercising jurisdiction. Adopting the magistrate judge’s
   report and recommendation, the district court likewise denied that motion.
          Unavailing in their efforts to avoid federal court, the Priesters then
   moved to dismiss the counterclaims against them. Citing various deed
   records, they challenged the validity of the assignments of the deed of trust,
   insisting that they call into question whether Appellees are truly owners and
   servicers of the loan. Because Appellees could not prove ownership, the

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   Priesters reasoned, they lacked standing to foreclose. The district court
   adopted the magistrate judge’s recommendation to deny the Priesters’
   motion to dismiss, agreeing that “Deutsche Bank qualifies as a mortgagee
   with standing to foreclose under Texas Property Code § 51.0001 because it
   is the last entity to whom the security interest has been assigned.”
          Following the Priesters’ motion to dismiss, Deutsche Bank and Select
   Portfolio moved for summary judgment on all pending claims. The district
   court granted the summary judgment motion in most respects but denied it
   regarding the counterclaim for judicial foreclosure, and the case proceeded
   to a bench trial. After trial, the district court reconsidered its summary
   judgment order and concluded that it had “erroneously denied summary
   judgment” on the judicial foreclosure counterclaim. Alternatively, upon
   consideration of the trial evidence, the court determined that Deutsche Bank
   and Select Portfolio were entitled to judicial foreclosure “even if” it had not
   reconsidered its prior denial of summary judgment. Accordingly, to prevent
   double recovery, the district court determined that Deutsche Bank and Select
   Portfolio could not also recover under alternative subrogation theories. The
   Priesters timely appealed.
                                       II.
          We review a denial of a motion to remand de novo. Gebbia v. Wal-Mart
   Stores, Inc., 233 F.3d 880, 882 (5th Cir. 2000). While we review an abstention
   ruling for abuse of discretion, “we review de novo whether the requirements
   of a particular abstention doctrine are satisfied.” Ark. Project v. Shaw, 775
F.3d 641, 648 (5th Cir. 2014) (quoting Romano v. Greenstein, 721 F.3d 373,
   380 (5th Cir. 2013)). “A court abuses its discretion when its ruling is based
   on an erroneous view of the law or a clearly erroneous assessment of the
   evidence.” Kipps v. Caillier, 197 F.3d 765, 770 (5th Cir. 1999).

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          Summary judgment is only appropriate “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. of Civ. P. 56(a). We review a district
   court’s grant of summary judgment de novo. Ezell v. Kan. City S. Ry. Co., 866
F.3d 294, 297 (5th Cir. 2017).
                                       III.
          The Priesters assert that the district court erred in denying their
   motion to remand for lack of diversity jurisdiction because Appellees failed
   to plead their allegations with sufficient particularity. A federal court may
   exercise diversity jurisdiction over a civil suit between citizens of different
   states if the amount in controversy exceeds $75,000. Flagg v. Stryker Corp.,
   819 F.3d 132, 135 (5th Cir. 2016). Diversity jurisdiction typically requires
   “complete diversity” of parties, such that no plaintiff may be a “citizen of
   the same State as any defendant.” Id. at 136. A court may, however,
   determine that the plaintiff improperly joined a non-diverse defendant,
   “disregard the citizenship of that defendant, dismiss the non-diverse
   defendant from the case, and exercise subject matter jurisdiction over the
   remaining diverse defendant.” Id. (footnote omitted). A defendant may
   establish improper joinder—sometimes referred to as fraudulent joinder—
   either by showing (1) actual fraud in the plaintiff’s pleading of jurisdictional
   facts or (2) the plaintiff’s inability to establish a cause of action against the
   non-diverse defendant in state court. Smallwood v. Ill. Cent. R. Co., 385 F.3d
568, 573 (5th Cir. 2004) (en banc), cert. denied 544 U.S. 992 (2005). A
   defendant establishes the second method by “demonstrat[ing] that there is
   no possibility of recovery by the plaintiff against an in-state defendant, which
   stated differently means that there is no reasonable basis for the district court
   to predict that the plaintiff might be able to recover against an in-state
   defendant.” Id. Here, Appellees relied only on the second method for
   establishing improper joinder.

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          The Priesters contend that our decision in Parks v. New York Times
   Co., 308 F.2d 474, 478 (5th Cir. 1962), imposes a heightened pleading
   standard, requiring that improper joinder be pleaded with particularity and
   proved by clear and convincing evidence—a standard they claim Appellees
   did not meet.     But even assuming arguendo that Parks does require a
   heightened pleading standard in actual fraud cases, recent cases distinguish
   the two methods for proving improper joinder and expressly hold that the
   second method utilizes a standard federal Rule 12(b)(6)-type analysis. See
   Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193,
   200-01 (5th Cir. 2016) (citing Smallwood, 385 F.3d at 573). Thus, the
   Priesters’ arguments are inapposite here, where Appellees did not plead
   actual fraud.
          The Priesters then argue that the district court erred by not abstaining
   from exercising jurisdiction. In Burford v. Sun Oil Co., the Supreme Court
   held that federal courts may abstain from exercising jurisdiction over matters
   where it otherwise would have jurisdiction. 319 U.S. 315 (1943). We have
   identified five factors for consideration when determining whether to abstain:
   (1) whether the cause of action arises under a federal or state law; (2) whether
   the case requires inquiry into unsettled issues of state law; (3) the importance
   of the state interest involved; (4) the state’s need for a coherent policy in that
   area; and (5) the presence of a special state forum for judicial review. Wilson
   v. Valley Elec. Membership Corp., 8 F.3d 311, 314 (5th Cir. 1993). Significantly,
   abstention is not a doctrine that advises federal courts to refrain from
   exercising jurisdiction simply because state courts could entertain the case;
   rather, “only the clearest of justifications will warrant dismissal.” Colo. River
   Water Conservation Dist. v. United States, 424 U.S. 800, 819 (1976).
          We see no indication that the district court’s ruling was “based on an
   erroneous view of the law or on a clearly erroneous assessment of the
   evidence.” Kipps, 197 F.3d at 770. First, this dispute arises under state law,

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   but it does not require inquiry into unsettled issues of state law. And, unlike
   previous iterations of this litigation, the circumstances of this case do not
   require venturing any Erie guesses about Texas law, and the district court was
   well equipped to assess the evidence and apply existing state law. Moreover,
   considering the third and fourth factors, we do not question the significance
   of Texas’s interest in the homestead rights of its citizens or its need for a
   coherent policy in that regard. But particularly where no Erie guesses are
   involved, there was little reason to suspect that the district court’s decision
   to retain jurisdiction would upset the coherency of the state’s policy. Nor,
   finally, do the Priesters identify any special state forum for disputes of this
   nature.   In short, dismissal was not warranted by “the clearest of
   justifications” and the district court did not abuse its discretion in denying
   the motion to abstain.
                                       IV.
          In addition to their constitutional claims, the Priesters asserted non-
   constitutional claims for defamation, fraudulent concealment, fraud by non-
   disclosure, common-law fraud, negligent misrepresentation, breach of
   contract, and violations of the TDCPA.            The claims for declaratory
   judgment, defamation, and fraudulent concealment were raised in the prior
   litigation, but the remaining claims for fraud by nondisclosure, common-law
   fraud, negligent misrepresentation, breach of contract, and violations of the
   TDCPA were not.          Adopting the report and recommendation of the
   magistrate judge, the district court concluded that all their non-constitutional
   claims were barred by res judicata and, even if res judicata were not applicable,
   by the applicable statutes of limitations.
          We note first that the Priesters misstate the holding of the district
   court when they assert that it dismissed all their claims as barred by res
   judicata and, alternatively, the statutes of limitations. The district court

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   dismissed only their non-constitutional claims on such grounds; it expressly
   declined to apply the doctrine of res judicata to their claim that the loan was
   constitutionally deficient because the court determined that “the issue of
   whether or not the [l]oan is constitutionally valid was never fully litigated”
   in the prior litigation. Moreover, as the district court correctly noted, the
   Priesters challenge the constitutional validity of the loan as an affirmative
   defense to the judicial foreclosure counterclaim, but because no claim for
   judicial foreclosure was ever made prior to this case, such a defense could not
   have been raised previously. Nonetheless, the district court did conclude,
   and we agree, that the Priesters’ non-constitutional claims were barred by res
   judicata. 2
           We review the res judicata effect of a prior judgment de novo because it
   involves a question of law. Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d
559, 571 (5th Cir. 2005). The doctrine of res judicata encompasses two
   discrete but related preclusive doctrines: (1) true res judicata or claim
   preclusion and (2) collateral estoppel or issue preclusion. Id.   Claim
   preclusion “bars the litigation of claims that either have been litigated or
   should have been raised in an earlier suit.” Id. Central to “the conclusive
   resolution of disputes,” Montana v. United States, 440 U.S. 147, 153 (1979)
   (citations omitted), the doctrine protects litigants “from the expense and
   vexation attending multiple lawsuits, conserves judicial resources, and
   fosters reliance on judicial action by minimizing the possibility of inconsistent
   decisions.” Id. at 153-54. Res judicata applies when four elements are met:
   (1) the parties to the two actions are identical or in privity; (2) the prior

           2
               Because we affirm the district court’s conclusion that these claims are barred by
   principles of preclusion, we do not consider whether they would also be outside any
   applicable limitation periods.

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   judgment was rendered by a court of competent jurisdiction; (3) there was a
   final judgment on the merits; and (4) the same claim or cause of action is
   involved in both cases. In re Southmark Corp., 163 F.3d 925, 934 (5th Cir.
   1999).
            In their briefs on appeal, the Priesters do not raise the issue of whether
   these elements are satisfied when applied to their claims. Rather, they
   contend that their claims are exempt from res judicata, asserting that “claim
   preclusion is no defense where, between the first and second suits there has
   been an intervening change in law or modification of significant facts creating
   new legal conditions.” On rare occasions, we have declined to apply
   preclusion doctrines, particularly when constitutional rights are involved,
   where changed circumstances are significant and have created new legal
   conditions. See Hernandez v. City of Lafayette, 699 F.2d 734, 737 (5th Cir.
   1983); Jackson v. DeSoto Par. Sch. Bd., 585 F.2d 726, 729 (5th Cir. 1978).
   Underlying that exception is the recognition that in such cases “the
   operation of the preclusion doctrines would result in unequal treatment of
   similarly situated individuals, some of whom have the misfortune to have
   sought legal redress at an earlier phase of legal developments.” Jackson, 585
F.2d at 729. The exception, however, is of “limited applicability,” Houston
   Pro. Towing Ass’n v. City of Houston, 812 F.3d 443, 448 n.10 (5th Cir. 2016),
   applying only where preclusion principles “would violate an overriding
   public policy or result in manifest injustice,” Moch v. E. Baton Rouge Par. Sch.
   Bd., 548 F.2d 594, 597 (5th Cir. 1977). It does not appertain here.
            The Priesters assert that the exception should apply to their claims
   because the changes in state constitutional law rendered by the decisions in
   Wood and Garofolo are significant and create new legal conditions. See Wood,
505 S.W.3d at 547; Garofolo, 497 S.W.3d at 479. Perhaps, though we are
   skeptical, the changes wrought by those decisions do sufficiently impact the
   legal environment of the Priesters’ constitutional claim to satisfy the

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   exception, but that is of no matter here because the district court applied res
   judicata only to the Priesters’ non-constitutional claims. We fail to see, and
   the Priesters nowhere indicate, how the new legal conditions created by
   Wood, Garofolo, or any other changes in law have any bearing on those claims,
   which include defamation, fraudulent concealment, fraud by non-disclosure,
   common-law fraud, negligent misrepresentation, breach of contract, and
   violations of the TDCPA. Accordingly, we agree with the district court’s
   conclusion that these claims are precluded.
                                        V.
          The Priesters next assert that Appellees lack “standing” to foreclose
   because they have failed to establish an unbroken chain of title, drawing into
   question whether they own either the note or deed of trust. They allege that
   the original lender, Long Beach, sold the note and deed of trust—which were
   then securitized and sold to other third parties—before it merged with
   Washington Mutual Bank and subsequently failed.             To support their
   assertion that Long Beach transferred the obligation before merging with
   Washington Mutual, the Priesters cite a voluminous 2006 filing with the
   Securities and Exchange Commission (“SEC”) made by a separate entity
   called Long Beach Securities. While they concede that no record of any
   assignment to Long Beach Securities exists, the Priesters claim that the filing,
   which purportedly lists their loan number, is a representation that Long
   Beach Securities owned the note and deed of trust at the time of filing. Thus,
   they contend, when the Federal Deposit Insurance Corporation (“FDIC”),
   acting as receiver, acquired the assets of Washington Mutual Bank and Long
   Beach by operation of law, neither the note nor the deed of trust was among
   the assets it assumed. Accordingly, JP Morgan, having obtained those assets
   from the FDIC, purportedly never owned the obligations it later assigned to
   Deutsche Bank and so “the wrong party is attempting to foreclose.”

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          The Texas Property Code specifies that “if the security interest has
   been assigned of record, the last person to whom the security interest has
   been assigned of record” qualifies as a “mortgagee” with the right to
   foreclose.    TEX. PROP. CODE ANN. § 51.0001(4).            The district court
   concluded, and the Priesters apparently do not contest, that Deutsche Bank
   was the last assignee of record. Appellees submitted notarized, public real
   property records from Collin County, Texas, containing the legal description
   of the property at issue and documenting the assignment by JP Morgan to
   Deutsche Bank and a subsequent assignment from one Deutsche Bank entity
   to another. The plain text of the Texas Property Code requires nothing more,
   and unlike the borrowers in Reinagel v. Deutsche Bank Nat’l Trust Co., 735
F.3d 220, 225-26 (5th Cir. 2013), the Priesters do not allege that the transfers
   involved fraud.
          But there is an additional complication to this seemingly
   straightforward analysis under the Texas Property Code. Texas case law
   cited by the Priesters suggests that, where there is an unexplained gap in the
   chain of title, the party seeking to foreclose must prove the transfer by which
   they obtained their interest. See Leavings v. Mills, 175 S.W.3d 301, 309 (Tex.
   App.—Houston [1st Dist.] 2004, no pet.); First Gibraltar Bank, FSB v.
   Farley, 895 S.W.2d 425, 428 (Tex. App.—San Antonio 1995, writ denied);
   Jernigan v. Bank One, Texas, N.A., 803 S.W.2d 774, 777 (Tex. App.—
   Houston [14th Dist.] 1991, no writ). These cases do not bolster the Priesters’
   position, however, because we agree with the district court’s finding that

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   there is no gap in the chain of title from the time of the loan’s inception to
   the most recent assignee of record. 3
           Appellees presented summary judgment evidence documenting that
   the original lender was Long Beach; that Long Beach merged into
   Washington Mutual Bank; that, as a matter of public record, JP Morgan
   acquired all of the assets of Washington Mutual Bank—including the assets
   of Long Beach—from the FDIC upon Washington Mutual Bank’s failure;
   and that JP Morgan transferred the deed of trust to Deutsche Bank, which
   subsequently assigned it to itself. We fail to see any unexplained gap in that
   chain. Cf. Miller v. Homecomings Fin., LLC, 881 F. Supp. 2d 825, 831 (S.D.
   Tex. 2012) (finding a gap in the chain of title where purported mortgagee
   could only identify the most recent recorded assignment “in a chain of
   unknown length”). The Priesters do not so much attempt to break a link in
   the chain documented by Appellees as to suggest, by conjuring up a
   competing owner, that a secondary chain exists somewhere. That is not the
   same thing as identifying an unexplained gap in the chain of title. Moreover,
   the Priesters could not show that there is a competing assignee of record—
   which one would expect if Long Beach did indeed securitize and sell the
   obligation—who could contest the validity of the most recent assignments
   and commence a foreclosure action. The Priesters defaulted on their loan a
   decade ago. If such an entity existed, we suspect it would have come forward
   to enforce its rights well before now.

           3
               Because we do not agree with the Priesters’ contention that there is a gap in the
   chain of title, we decline to consider whether we should, or even could, take judicial notice
   of any documents on file with the SEC.

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                                              VI.
           The heart of the Priesters’ argument is that Appellees cannot prevail
   on their claim for judicial foreclosure because (1) there is no cause of action
   for judicial foreclosure; (2) the lien was constitutionally invalid and could not
   be “estopped into existence” by the district court; (3) Appellees failed to
   carry their burden to prove the constitutional validity of the loan; and (4)
   Appellees failed to cure their violation of the Texas Constitution. 4 We are
   unpersuaded by these arguments.
               First, contrary to the Priesters’ contention, judicial foreclosure is its
   own cause of action under Texas law. We have repeatedly recognized a cause
   of action for judicial foreclosure under Texas Civil Practice and Remedies
   Code § 16.035(a). See, e.g., Ocwen Loan Servicing, L.L.C. v. REOAM, L.L.C.,
   755 F. App’x 354, 354 (5th Cir. 2018); Justice v. Wells Fargo Bank Nat’l Ass’n,
   674 F. App’x 330, 333 (5th Cir. 2016).
           The Priesters’ second and third arguments are interrelated. They
   contend that the loan is constitutionally invalid because it was signed in their
   home rather than at the office of the lender, an attorney, or a title company
   and because they were not provided the constitutionally required notice at
   least twelve days before the closing took place. Relying on Hruska v. First
   State Bank of Deanville, 747 S.W.2d 783, 784 (Tex. 1988), they observe that

           4
             The Priesters also spill much ink in their brief discussing why Appellees’
   subrogation claims are meritless. We need not consider those arguments, however,
   because the district court reversed its initial finding that Appellees were entitled to
   contractual or equitable subrogation when it determined, and we agree, that they were
   instead entitled to summary judgment on their judicial foreclosure counterclaim. And on
   appeal, Appellees concede that the district court was correct to do so. Likewise, because
   we affirm the grant of summary judgment, we do not reach the Priesters’ challenges to the
   district court’s evidentiary rulings during trial.

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   the lender carries the initial burden to prove that a lien existed. From that
   premise, they reason that Appellees must prove, independent of the
   Priesters’ affidavit, that the loan complied with the Texas Constitution as an
   element of their prima facie claim for judicial foreclosure. Instead, the district
   court, they contend, erroneously shifted the burden of proof by requiring that
   they prove the constitutional requirements were not met and then relied on
   their affidavit to estop them from challenging the validity of the loan. Hence,
   in their view, the district court estopped the lien into existence. But that
   argument incorrectly assumes that Appellees could not satisfy their initial
   burden without proving constitutional validity.
           We do not agree that, as part of its initial burden under Texas law, the
   party bringing a claim for judicial foreclosure must establish that the loan
   complies with every constitutional provision. The Supreme Court of Texas
   has held that “section 50(a) does not create substantive rights beyond a
   defense to foreclosure of a home-equity lien securing a constitutionally
   noncompliant loan.” Wood, 505 S.W.3d at 546 (citing Garofolo, 497 S.W.3d
   at 478). And basic principles of judicial economy demand that the party
   bringing a claim need not preempt every possible affirmative defense in order
   to make out a successful prima facie case. We are aware of no authority
   imposing such a rule of proceeding. Accordingly, we agree with the district
   court’s conclusion that borrowers, in asserting an affirmative defense, carry
   the burden to establish that constitutional requirements were not met. 5

           5   The Priesters challenge the authority of the cases relied on by the district court
   to reach this same conclusion. See In re Chambers, 419 B.R. 652, 670-71 (Bankr. E.D. Tex.
   2009), subsequently aff’d, 544 F. App’x 347 (5th Cir. 2013); Wilson v. Aames Capital Corp.,
   No. 14-06-00524-CV, 2007 WL 3072054, at *1 (Tex. App.—Houston [14th Dist.] Oct. 23,
   2007, no pet.). We need not resort to these cases to agree with the district court, but we

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Case: 19-40158        Document: 00515595989               Page: 16       Date Filed: 10/09/2020

                                          No. 19-40158

            The district court considered the affidavit evidence to estop the
   Priesters from challenging the constitutional validity of the loan after it had
   determined that Appellees had met their burden to establish a prima facie case
   for judicial foreclosure.         Notably, the Priesters offered no competent
   summary judgment evidence contradicting their affidavit’s statements as to
   the location of signing and the provision of notice, and the court accordingly
   granted summary judgment on a theory of quasi-estoppel. 6 The Priesters’
   basic objection is that the district court estopped a lien into existence and
   their arguments on appeal do not challenge the district court’s application of
   the quasi-estoppel factors as such. Because we conclude that the district
   court did not estop a lien into existence, we need not consider its legal
   conclusions with respect to quasi-estoppel.
            Finally, the Priesters argue that “Appellees’ failure to cure prohibits
   the enforcement of the void lien.” But the premise of that contention—that
   the lien was constitutionally void and necessitated curing—is mooted by the
   district court’s conclusion, which we affirm, that the Priesters are estopped
   from challenging constitutional validity.                  Appellees bear no legal
   responsibility to cure what the Priesters are estopped from claiming was
   ailed.
            AFFIRMED.

   note that while the Priesters challenge whether the cases constitute controlling authority,
   they do not cite any other controlling authority that contradicts their reasoning.
            6 The way in which this case unfolded procedurally in the district court somewhat

   muddles the record on appeal. At first, the district court denied summary judgment under
   a theory of equitable estoppel and proceeded to a bench trial. After trial, however, the court
   reconsidered its prior summary judgment order and proceeded to grant summary
   judgment, but under a theory of quasi-estoppel.

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