Case: 14-50223 Document: 00512850800 Page: 1 Date Filed: 11/26/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 14-50223
Summary Calendar
United States Court of Appeals
Fifth Circuit
FILED
November 26, 2014
JAMES E. ZABLOSKY,
Lyle W. Cayce
Clerk
Plaintiff-Appellant
v.
MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INCORPORATED;
MERSCORP; MIDFIRST BANK; JULIAN CASTRO, Secretary of Housing and
Urban Development; MIDLAND MORTGAGE COMPANY,
Defendants-Appellees
--------------------------------------
JAMES E. ZABLOSKY; KAREN ZABLOSKY,
Plaintiffs-Appellants
v.
MIDFIRST BANK; MIDLAND MORTGAGE COMPANY; JULIAN CASTRO,
Secretary of Housing and Urban Development; MERSCORP,
Defendants-Appellees
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:12-CV-407
USDC No. 5:12-CV-734
Case: 14-50223 Document: 00512850800 Page: 2 Date Filed: 11/26/2014
No. 14-50223
Before HIGGINBOTHAM, JONES, and HIGGINSON, Circuit Judges.
PER CURIAM: *
James and Karen Zablosky seek leave to proceed in forma pauperis
(“IFP”) in this appeal challenging the district court’s denial of their motion to
amend the complaint in a lawsuit challenging the foreclosure of their property.
For the following reasons, we deny the Zabloskys’ motion.
In 2007, the Zabloskys purchased a home in Floresville, Texas, and
executed a note and deed of trust in favor of Alethes, LLC (“Alethes”). Alethes
then transferred the note and deed of trust to GMAC Mortgage Company
(“GMAC”), which transferred the note and deed of trust to MidFirst Bank
(“MidFirst”). After the Zabloskys defaulted on their mortgage payments,
MidFirst and Midland Mortgage Co. (“Midland”), a division of MidFirst, sought
to foreclose on the Zabloskys’ property. The Zabloskys alleged that MidFirst
and Midland lack standing to foreclose because the transfers of the mortgage
to GMAC and then to MidFirst were unrecorded and therefore void. MidFirst
and Midland filed a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). The district court granted that motion, concluding that the
Zabloskys had failed to state a claim against MidFirst and Midland.
The Zabloskys then moved for leave to file an amended complaint,
alleging that MidFirst and Midland lacked standing to foreclose because the
note was not indorsed to MidFirst. The Department of Housing and Urban
Development opposed the motion. The district court denied the motion and
entered a final judgment in favor of MidFirst and Midland, as well as
Defendants Mortgage Electronic Registration Systems, Inc. (“MERS”) and
* 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. 14-50223
MERSCORP Holdings, Inc. The Zabloskys filed a notice of appeal in which they
challenged the district court’s denial of their motion for leave to file an
amended complaint. The district court denied the Zabloskys’ motion to proceed
IFP on appeal, finding that “the proposed appeal is lacking in arguable legal
merit, and is frivolous.”
We construe the Zabloskys’ IFP motion as a challenge to the district
court’s certification that their appeal was not taken in good faith. See Baugh v.
Taylor, 117 F.3d 197, 202 (5th Cir. 1997). In reviewing that certification, our
“inquiry is limited to whether the appeal involves legal points arguable on their
merits (and therefore not frivolous).” Howard v. King, 707 F.2d 215, 220 (5th
Cir. 1983) (internal quotation marks and citation omitted). We review the
district court’s decision to deny leave to amend a complaint for abuse of
discretion. United States ex rel. Adrian v. Regents of Univ. of Cal., 363 F.3d
398, 403 (5th Cir. 2004). Although “[t]he court should freely give leave when
justice so requires,” Fed. R. Civ. P. 15(a)(2), “[d]enial of leave to amend may be
warranted for undue delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies, undue prejudice to the opposing
party, or futility of a proposed amendment.” Ballard v. Devon Energy Prod.
Co., 678 F.3d 360, 364 (5th Cir. 2012) (internal quotation marks and citation
omitted). Where the district court fails to explain adequately the basis for its
denial, “we affirm only where the reason for the denial is readily apparent and
the record reflects ample and obvious grounds for denying leave to amend.”
Pervasive Software, Inc. v. Lexware GMBH & Co. KG, 688 F.3d 214, 232 (5th
Cir. 2012) (quoting Mayeaux v. La. Health Serv. & Indem. Co., 376 F.3d 420,
426 (5th Cir. 2004) (internal quotation marks and footnotes omitted)).
The district court’s explanation for denying the Zabloskys’ motion was
that “[t]he proposed amended complaint attempts to re-state Plaintiffs’ failed
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No. 14-50223
claims against these Defendants.” We read the district court’s explanation as
a finding that the amendment would be futile, and we agree with that
conclusion. Assuming that the note was not indorsed to MidFirst, that fact
alone would not deprive MidFirst of standing to foreclose. Although
indorsement may be required for a party to become the holder of a note, a non-
holder may still enforce a note if he proves the transfer by which he acquired
the note. Martin v. New Century Mortg. Co., 377 S.W.3d 79, 84 (Tex. Ct. App.
2012). The record contains an “Assignment of Deed of Trust,” filed in the
Wilson County records, through which MERS, acting as nominee for Alethes,
did “hereby grant, convey, assign, transfer, and set over to MidFirst Bank . . .
all of the Assignor’s rights, title and interest in and to . . . [t]he Promissory
Note [and] . . . [t]he Mortgage.” That assignment indicates that MidFirst is the
owner of the note and deed of trust and has standing to foreclose on the
Zabloskys’ property. See id. at 84–85 (holding that a document assigning a
promissory note and deed of trust to Wells Fargo established that Wells Fargo
owned the note and deed of trust and could foreclose on the note’s collateral,
even though the note was not indorsed to Wells Fargo). Because the filing of
the amended complaint would be futile, the district court did not abuse its
discretion in denying leave to amend.
The Zabloskys’ appeal is without arguable merit and is thus frivolous.
See 5th Cir. R. 42.2. Accordingly, their request for IFP status is DENIED, and
their APPEAL IS DISMISSED. See Baugh, 117 F.3d 197, 202 & n.24 (5th Cir.
1997).
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