Fern Gillespie v. Wells Fargo Home Mortgage

Case: 12-50815 Document: 00512435508 Page: 1 Date Filed: 11/08/2013

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
November 8, 2013

No. 12-50815 Lyle W. Cayce
Summary Calendar Clerk

CAROL L. REEVES,

Plaintiff - Appellant
v.

WELLS FARGO HOME MORTGAGE, also known as Kimberly Biery;
WELLS FARGO BANK NATIONAL ASSOCIATION, also known as Scott
Holzemiester; BARRETT FRAPIER DAFFIN TURNER & ENGEL, LIMITED
LIABILITY CORPORATION; BARRETT DAFFIN FRAPPIER TURNER &
ENGEL; MERS, (Mortgage Electronic Registration System),

Defendants - Appellees

Appeal from the United States District Court
for the Western District of Texas
USDC No. 3:10-CV-240

Before SMITH, PRADO, and HIGGINSON, Circuit Judges.
PER CURIAM:*
Carol Reeves argues that Wells Fargo Home Mortgage and Wells Fargo
Bank National Association (collectively “Wells Fargo”) wrongfully initiated
foreclosure proceedings after she defaulted on her loan, because they did not own

*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
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No. 12-50815

the promissory note securing the mortgage. Because we find that Reeves did not
establish a genuine issue of material fact as to the note’s ownership, we AFFIRM
the district court’s grant of summary judgment to Defendants.
FACTS AND PROCEEDINGS
In April 2004, Fern L. Gillespie (“Gillespie”), then known as Fern L.
Stevenson, executed a Deed of Trust and a Promissory Note (the “Note”) on the
property located at 2500 Penwood Drive, El Paso, Texas (the “property”). The
Note identified the lender as “PlainsCapital McAfee Mortgage Company and its
successors and assigns.” Gillespie promised to pay the principal sum of $62,583,
plus interest, to PlainsCapital. The loan was secured by the Deed of Trust,
transferring interest in the property to Carl W. Odom, the named trustee. The
Deed of Trust identified the beneficiary as “Mortgage Electronic Registration
Systems, Inc. (‘MERS’), (solely as nominee for Lender, as hereinafter defined,
and Lender’s successors and assigns).” “Lender” is identified as “PlainsCapital
McAfee Mortgage Company.”
There are two undated signature stamps on the last page of the Note as
it appears in the record. One stamp reads: “Pay to the order of Wells Fargo
Bank, N.A. Without Recourse PlainsCapital McAfee Mortgage Company, Kelly
Summers, Assistant Secretary.” The other states: “Without Recourse Pay to the
Order of Wells Fargo Bank, N.A. By Amy Sharp, Vice President, Loan
Documentation.” The stamps bear the signatures of Summers and Sharp,
respectively. In an affidavit submitted to the district court, Michael Dolan, an
operations analyst for Wells Fargo Bank, stated that PlainsCapital endorsed the
note to Wells Fargo on July 29, 2004, without recourse, and that “Wells Fargo
has been the owner and holder of the Note since July 29, 2004.” Dolan also
stated: “Under the Deed of Trust, MERS remained a beneficiary of record as
‘nominee for Lender and Lender’s successors and assigns;’ therefore, MERS
became the nominee for Wells Fargo once the Note was transferred to Wells

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Fargo.” Gillespie began making monthly payments on the Note to Wells Fargo
in August 2004.
In 2007, Gillespie moved out of state, sold the property to her daughter,
Carol Reeves, and filed a quitclaim deed conveying her interest in the property
to Reeves. Reeves was unable to replace Gillespie as the named borrower on the
Note and the Deed of Trust, but she did make payments on the Note. Reeves
made her last payment on October 29, 2009 to cover the month of November
2009. She and Gillespie had “becom[e] concerned about who in fact owned the
Note and Mortgage” and they began corresponding with Wells Fargo in an
attempt to obtain more information.
On February 7, 2010, Wells Fargo notified Gillespie that her mortgage was
in default, with $2,048.67 in past due payments, and that it intended to
accelerate the Note if Gillespie failed to cure the default by March 9, 2010.
Reeves wrote to Wells Fargo on March 8, 2010, alleging that the mortgage was
“fraudulent due to predatory lending practices.” MERS then executed a
document entitled “Assignment of Note and Deed of Trust,” naming Wells Fargo
as the assignee and providing that it would be effective on March 31, 2010. The
notarized assignment indicated that the “Holder of the Note and Deed of Trust
transferred and assigned each to Assignee, and warranted that the lien was
valid against the property in the priority indicated.” The notarized assignment
was signed on behalf of MERS on June 9, 2010 by Stephen C. Porter, identified
as an “Assistant Secretary.”
On April 30, 2010, Wells Fargo, through their counsel Barrett Daffin
Frappier Turner & Engel, LLP (“BDFTE”), notified Gillespie that the Note had
been accelerated and the property would be posted for foreclosure sale on July
6, 2010. On May 10, 2010, Wells Fargo’s counsel sent Gillespie a copy of the

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Note and Deed of Trust with the stamped endorsements.1 In June 2010,
Gillespie and Reeves filed to suit to halt the foreclosure. On July 2, 2010, the
district court denied their request for a temporary restraining order and
preliminary injunction; this court affirmed that decision on June 27, 2011.
Reeves v. Wells Fargo Home Mortg., 431 F. App’x 304 (5th Cir. 2011)
(unpublished). Reeves filed an amended complaint in July 2011. On May 11,
2012, the district court granted Wells Fargo and MERS’s (“Defendants”) motion
for summary judgment, dismissing Reeves’s claims for declaratory relief,
wrongful acceleration, wrongful foreclosure, fraud, and intentional infliction of
emotional distress.2
On March 5, 2012, MERS executed a document entitled “Corporate
Assignment of Deed of Trust,” which assigned to Wells Fargo MERS’s “beneficial
interest under the Deed of Trust.” The document was signed by Deborah
Humphrey, identified as an Assistant Secretary. Reeves filed a motion for
reconsideration under Federal Rule of Civil Procedure 59(e), based in part on:
the 2012 assignment; an online list of MERS’s corporate officers which did not
include Stephen Porter, as well as a website listing Porter as a partner of
BDFTE; and a copy of the Note allegedly sent to Gillespie by Wells Fargo in 2010
which did not contain the stamped endorsements. The district court denied

1
An attorney named Terrance Swanson wrote to Wells Fargo on June 29, 2010,
regarding Gillespie’s visit to his office. Swanson stated that Gillespie and Reeves “have been
reading a book about mortgage scams” and “the book itself . . . are scam-meisters themselves.”
Swanson requested that Wells Fargo “give [Gillespie and Reeves] a step-by-step procedure”
to “bring [the loan] current,” because Gillespie’s “property in Texas is worth more than she
owes so it does not seem needful for her to play games or look for some bureaucratic misstep.”
In reply, Wells Fargo noted that Gillespie had not authorized it to release loan information
to Swanson and gave the number of its loss mitigation department.
2
The district court also granted additional defendant BDFTE’s motion to dismiss.
Reeves did not allege claims against BDFTE in her first amended complaint, and on appeal
she states that no claims against the law firm “had been asserted.” She has thus waived any
claims against BDFTE. See Brinkmann v. Dallas Cnty. Deputy Sheriff Abner, 813 F.2d 744,
748 (5th Cir. 1987).

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Reeves’s Rule 59 motion on July 30, 2012. The district court found that the
websites relating to Porter and the Note sent to Gillespie in 2010 did not qualify
as “newly discovered” evidence. The district court treated the 2012 assignment
as newly discovered evidence, but found that it did “not call into question the
dismissal of Reeves’s claim for wrongful acceleration” because it “at best, allows
one to speculate something suspicious happened with the Deed [of Trust] . . .
[Reeves’s] evidence about the Deed does not buttress her wrongful acceleration
claim focused on the Note, and Reeves has no other evidence to suggest that
anything suspicious occurred with the Note.”
STANDARD OF REVIEW
“We review a 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 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.” Fed. R. Civ. P. 56(a).
The standard of review of a motion for reconsideration “is dependent on
whether the district court considered the materials attached to . . . the motion,
which were not previously provided to the court.” Templet v. HydroChem Inc.,
367 F.3d 473, 477 (5th Cir. 2004). If materials attached to a motion for
reconsideration are “considered by the district court, and the district court still
grants summary judgment, the appropriate appellate standard of review is de
novo.” Id. If the district court refuses to consider such materials, we review for
abuse of discretion. Id.
DISCUSSION
I. Standing
Defendants argue that Reeves does not have standing to sue because she
“is not a party to the loan in dispute” and thus there is “no real controversy

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between her and” Defendants.3 Defendants cite Goswami v. Metro Savings &
Loan Association for the proposition that “[a]s a general rule, only the mortgagor
or a party who is in privity with the mortgagor has standing to contest the
validity of a foreclosure sale pursuant to the mortgagor’s deed of trust.” 751
S.W.2d 487, 489 (Tex. 1988).4 While the Texas Supreme Court in Goswami
acknowledged that rule, it also noted an exception: “[W]hen the third party has
a property interest, whether legal or equitable, that will be affected by such a
sale, the third party has standing to challenge such a sale to the extent that its
rights will be affected by the sale.” Id. Reeves acquired Gillespie’s interest in
the property via a recorded quit-claim deed, and she made payments on the Note
from 2007 to 2009. Reeves’s interest in the property is sufficient to challenge the
validity of Defendants’ authority to foreclose. See Long v. NCNB–Texas Nat’l
Bank, 882 S.W.2d 861, 867 (Tex. App.–Corpus Christi 1994, no writ) (a plaintiff
“need only have established a property interest in the deed of trust realty to
impute a flaw” in the sale).5
II. Summary Judgment
Reeves’s only claim on appeal, wrongful acceleration, is premised on her
contention that Wells Fargo did not own the Note and the Deed of Trust on her

3
Contrary to Reeves’s contention, Defendants did make this argument before the
district court.
4
Defendants also cite Martinez v. JPMorgan Chase Bank, N.A., but that case addressed
only whether a party not in privity with the mortgagor is entitled to notice of a foreclosure, not
whether such a party can challenge the mortgagee’s authority to foreclose. No. SA-9-CV-675-
XR, 2010 WL 1780351, at *2 (W.D. Tex. May 3, 2010).
5
Defendants also argue that even if Reeves has standing to challenge the Note and
Deed of Trust, she does not have standing to challenge the assignment because she was not
a party to it. We have recently held, however, that under Texas law a homeowner has
standing to challenge the assignment of a mortgage as void. Reinagel v. Deutsche Bank Nat’l
Trust Co., 722 F.3d 700, 705 (5th Cir. 2013) (allowing homeowners’ claim to proceed where
they were “not attempting to enforce the terms of the instruments of assignment” but rather
“urg[ing] that the assignments [were] void ab initio.”).

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residence when it began the foreclosure process, and the acceleration was
therefore invalid.6 A “party seeking to foreclose must have the right to enforce
the debt it seeks to satisfy.” Reinagel v. Deutsche Bank Nat’l Trust Co., 722 F.3d
700, 706 (5th Cir. 2013).
Reeves argues that there is no “documentary proof of transfer of” the note
from PlainsCapital to Wells Fargo before Wells Fargo began foreclosure
proceedings in 2010. Specifically, she objects to the district court’s consideration
of Dolan’s affidavit, which states that the Note was endorsed to Wells Fargo in
2004, because Dolan lacked personal knowledge of that transaction. Federal
Rule of Civil Procedure 56(c)(4) provides that, on summary judgment, an
affidavit “must be made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant . . . is competent to testify on
the matters stated.”
Reeves did not object to the admission of Dolan’s affidavit before the
district court. In fact, Reeves stated in her Rule 59 motion that “Mr. Dolan’s
affidavit introducing documents may be admissible.” The admissibility of
evidence at summary judgment “is subject to the same standards and rules that
govern the admissibility of evidence at trial.” Donaghey v. Ocean Drilling &
Exploration Co., 974 F.2d 646, 650 n.3 (5th Cir. 1992). “An affidavit that does
not measure up to the standards of” Rule 56 “is subject to a timely motion to
strike. In the absence of this motion or other objection, formal defects in the
affidavit ordinarily are waived.” Auto Drive-Away Co. of Hialeah v. Interstate
Commerce Comm’n, 360 F.2d 446, 448–49 (5th Cir. 1966); see also Munoz v. Int’l
Alliance of Theatrical Stage Employees & Moving Picture Mach. Operators, 563

6
Because Reeves has not briefed her claims for declaratory relief, wrongful foreclosure,
fraud, and intentional infliction of emotional distress, she has waived those claims. See
Brinkmann v. Dallas Cnty. Deputy Sheriff Abner, 813 F.2d 744, 748 (5th Cir. 1987).

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F.2d 205, 214 (5th Cir. 1977) (“Inadmissible material that is considered by a
district court without challenge may support a summary judgment. Here there
was no timely objection and it is deemed waived.”).
Regardless of whether Reeves waived her objection to Dolan’s affidavit, the
district court did not err in considering it. In Resolution Trust Corp. v. Camp,
we considered a grant of summary judgment based in part on affidavits from
employees of the defendants who “had personal knowledge that RTC took over
the assets of the failed institutions, [but] they had no precise personal knowledge
of this particular note.” 965 F.2d 25, 29–30 (5th Cir. 1992). We concluded that
to exclude the affidavits would establish “a standard so strict that summary
judgment would be all but impossible.” Id. at 29; see also Diamond Offshore Co.
v. A&B Builders, Inc., 302 F.3d 531, 545 (5th Cir. 2002), overruled on other
grounds by Grand Isle Shipyard, Inc. v. Seacor Marine, LLC, 589 F.3d 778 (5th
Cir. 2009) (finding no abuse of discretion where the district court admitted
affidavits wherein the affiant stated that he was the director of claims for the
defendant, that he “had ‘personal knowledge of the facts stated’ therein, and that
he had access to and had reviewed [the defendant’s] records as they pertain to
information contained in the affidavits.”).
Reeves does not contest that she and Gillespie began payments to Wells
Fargo on the Note in August 2004, directly after Wells Fargo alleges it took over
the Note, and continued to make payments to Wells Fargo until 2009. In
addition, Wells Fargo provided a copy of the Note with stamped endorsements
that it sent to Reeves in May 2010, and Reeves did not challenge this evidence
at summary judgment. In the face of this evidence, Reeves failed to show a
genuine issue of material fact as to whether Wells Fargo owned the Note before
it began foreclosure proceedings. Ownership of the Note was sufficient to allow
Wells Fargo to foreclose. See Gilbreath v. White, 903 S.W.2d 851, 854 (Tex. App.
1995) (“the collateral follows the promissory note obligation”); Lawson v. Gibbs,

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591 S.W.2d 292, 294 (Tex. App.–Houston [14th Dist.] 1979, writ ref’d n.r.e.); Tex.
Bus. & Com. Code § 9.203(g); id. cmt. 9 (“Subsection (g) codifies the common-law
rule that a transfer of an obligation secured by a security interest or other lien
on personal or real property also transfers the security interest or lien.”); see also
Kiggundu v. Mortgage Elec. Registration Sys. Inc., 469 F. App’x 330, 331–32 (5th
Cir.) (unpublished), cert. denied, 133 S. Ct. 210 (2012) (noting that “under Texas
law, the mortgage follows the note” and it is “sufficient for the [lender] to
establish that it was in possession of the note; it was not required to show that
the deed of trust had been assigned to it.”).
III. Motion for Reconsideration
A Rule 59(e) motion “calls into question the correctness of a judgment,”
and “serves the narrow purpose of allowing a party to correct manifest errors of
law or fact or to present newly discovered evidence.” Templet, 367 F.3d at
478–79. Reeves attached three pieces of evidence to her motion for
reconsideration: websites listing Porter as a partner at a law firm rather than
a corporate officer of MERS; a copy of the Note which she alleges Wells Fargo
sent to her and Gillespie in 2010 without the stamped endorsements; and the
2012 assignment.
Reeves did not allege fraud in connection with Porter’s signature on the
2010 assignment in her response to Defendants’ motion for summary judgment,
but did discuss the issue—without attaching the relevant websites—in her
second “Amended Complaint” filed on the same day as the response, March 9,
2012. The district court did not consider the issue in its order granting summary
judgment. An “unexcused failure to present evidence available at the time of
summary judgment provides a valid basis for denying a subsequent motion for
reconsideration.” Templet, 367 F.3d at 479. But even assuming Porter was not
an officer of MERS, his “lack of authority . . . does not furnish [Reeves] with a
basis to challenge” the 2010 assignment. See Reinagel, 722 F.3d at 707. This is

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so because under Texas law, “a contract executed on behalf of a corporation by
a person fraudulently purporting to be a corporate officer is, like any other
unauthorized contract, not void, but merely voidable at the election of the
defrauded principal”—here, MERS. Id. at 706 (citing Nobles v. Marcus, 533
S.W.2d 923 (Tex. 1976)). And an obligor such as Reeves or Gillespie “may not
defend [against an assignee’s effort to enforce the obligation] on any ground
which renders the assignment voidable only.” Id. at 706–07. Instead, “under
Texas law, facially valid assignments cannot be challenged for want of authority
except by the defrauded assignor.” Id. at 709.
The district court did not abuse its discretion in not treating as newly
discovered the copy of the unendorsed Note, as Reeves alleges that she received
it in January 2010, before litigation began. See Templet, 367 F.3d at 479
(finding no abuse of discretion where “the underlying facts were well within the
[plaintiffs’] knowledge prior to the district court’s entry of judgment.”).
By contrast, the district court properly treated the 2012 assignment of the
Deed of Trust from MERS to Wells Fargo as newly discovered, but concluded it
did not affect the 2004 endorsement of the Note from PlainsCapital to Wells
Fargo. The 2012 assignment conveyed MERS’s “beneficial interest under the
Deed of Trust” to Wells Fargo. It did not address the Note. MERS’s 2012
assignment of the Deed of Trust may arguably be superfluous if the 2010
assignment of both the Note and Deed of Trust was valid. Nonetheless, we have
not previously treated two successive and potentially overlapping assignments
as necessarily suspicious. See Reinagel,722 F.3d at 706 (noting that where a
first assignment was “sufficient to give [the defendant] authority to foreclose .
. . the validity of the second assignment is irrelevant.”).
Further, Reeves has failed to “point[] to evidence in the record [showing]
. . . that [she] had a legitimate fear that [Wells Fargo] was not the owner and
holder of the note in question and that some other entity,” such as MERS or

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PlainsCapital, “might later approach [her] demanding payment.” Resolution
Trust Corp., 965 F.2d at 30. In other words, she did not“point[] to anything in
the record to indicate . . . any legitimate fear that any entity other than [the
defendant] is owner and holder of the note.” Id.; see also Reinagel, 722 F.3d at
711 (Graves, J., concurring) (where plaintiffs “admit they made their payments
to [Defendants] . . . there is no indication that [plaintiffs] were confused as to
which lender to pay, or that a significant possibility exists of [the original lender]
attempting to collect on the note.”). The district court did not err in granting
summary judgment after considering the 2012 assignment. See Templet, 367
F.3d at 477.
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the district court.

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