Affirmed and Opinion Filed March 5, 2014
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-12-01612-CV
ANIL DAS & SHEELA DAS, Appellant
V.
DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE UNDER POOLING
AND SERVICING AGREEMENT DATED AS OF APRIL 1, 2006 MORGAN STANLEY
ABS CAPITAL I INC. TRUST 2006-NC3, BARCLAYS CAPITAL REAL ESTATE INC.
D/B/A HOMEQ SERVICING, AND OCWEN LOAN SERVICING, LLC, Appellees
On Appeal from the 101st Judicial District Court
Dallas County, Texas
Trial Court Cause No. 11-07136-E
MEMORANDUM OPINION
Before Justices Moseley, Bridges, and Francis
Opinion by Justice Francis
This case involves the security interest on the residential property of Anil and Sheela
Das. The Dases sued appellees to enjoin them from moving to foreclose on their property,
alleging Deutsche Bank National Trust Company was not the holder of the note. Deutsche
counterclaimed for breach of contract. After considering competing motions for summary
judgment, the trial court rendered judgment in favor of appellees. The Dases appeal, arguing (1)
none of the appellees is entitled to enforce the note, (2) appellees are estopped from relying on an
endorsed version of the note, and (3) the note and deed of trust were separated, rendering the
security interest in the property invalid. For reasons set out below, we reject their issues and
affirm the trial court’s judgment.
On November 23, 2005, the Dases executed a promissory note to New Century Mortgage
Corporation in the amount of $263,988 for the purchase of their home in Sunnyvale. The Note
was secured by a Deed of Trust of the same date. The Deed was signed by the Dases and
granted a security interest in the property to New Century. The Deed obligated the Dases to
make monthly payments in accordance with the Note and authorized acceleration of the note
balance and sale of the property in the event of default.
The Dases got behind on their mortgage payments. In January 2009, the loan servicer,
HomEq, notified the Dases they were in default and identified Deutsche Bank as the
creditor/owner of the note. After attempts to work out a repayment plan failed, the property was
scheduled for foreclosure on May 5, 2009. Four days before the scheduled sale, Anil Das filed
for chapter 13 bankruptcy. The record does not indicate what happened with the bankruptcy.
Two years later, in June 2011, the Dases filed this lawsuit against appellees alleging
Deutsche Bank was not a holder of the Note or a nonholder with rights of a holder and therefore
was not entitled to enforce the Note. They asserted claims for breach of contract and deceptive
trade practices. They also sought declaratory and injunctive relief to prohibit appellees from
moving to foreclose on their property.
Appellees filed a general denial. In addition, Deutsche Bank counterclaimed for breach
of contract, asserting it is the legal owner and holder of the Note and the Dases have failed to
make full and timely payments under the Note. As relief, Deutsche Bank asked the court to
declare the Dases in default on their payment obligations and to declare it may foreclose on the
property under the Note and Deed of Trust.
Both sides moved for summary judgment on the issue of whether Deutsche Bank was
owner or holder of the Note. After considering the motions, the trial court granted appellees’
motion and denied the Dases’ motion. The trial court rendered judgment that (1) the Dases take
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nothing on their claims, (2) the Dases are in default on the payment obligations under the Note
and Deed of Trust, and (3) Deutsche Bank may foreclose on the property. The Dases appealed.
The summary judgment rule provides a method of summarily ending a case that involves
only a question of law and no fact issues. TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt.
Co., 690 S.W.2d 546, 548–49 (Tex. 1985). When, as here, both sides move for summary
judgment, and the trial court grants one motion and denies the other, we review the summary
judgment presented by both sides and determine all questions presented. Commissioners Court
v. Agan, 940 S.W.2d 77, 81 (Tex. 1997). We review the summary judgment de novo to
determine whether a party’s right to prevail is established as a matter of law. Howard v. INA
County Mut. Ins. Co., 933 S.W.2d 212, 216 (Tex. App.—Dallas 1996, writ denied).
Appellees moved for summary judgment on the ground that Deutsche is the holder of the
Note. Attached to their motion was the affidavit of Paul Myers, a loan analyst at Ocwen Loan
Servicing, LLC. Myers stated his job duties included researching loan histories of parties in
litigation with Ocwen; determining whether or not the parties made timely principal, interest,
escrow and other payments on their mortgages serviced by Ocwen; reviewing the loan files that
Ocwen had for these parties to determine whether the loans were properly originated and
serviced; and serving as Ocwen’s corporate representative in trials, court hearings, depositions,
and mediations. Myers attested that he had researched and reviewed all of Ocwen’s documents
regarding the subject loan.
According to Myers, the original Note, after it was originated by New Century, was
endorsed by New Century in blank. Myers further asserted that along with its execution of this
endorsement, New Century, on December 1, 2005, executed an Assignment of Deed of Trust
reflecting the assignment of the Note from New Century to an unnamed assignee. Myers further
attested that on or about April 1, 2006, New Century transferred ownership of the Note to
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Deutsche. Later, an assignment was executed on March 4, 2009 to reflect the assignment of the
Note and Deed of Trust to Deutsche, and this assignment was recorded in the Dallas County real
property records six days later. The assignment was signed by Joyce Nelson, an employee of
HomEq, who had the authority from New Century to execute documents relevant to the Note for
New Century.
Further, Myers attested that HomEq was the loan servicer after the loan was originated by
New Century in November 2005. The Dases’ loan service, including the Note, transferred to
Ocwen on or about August 31, 2010, and Ocwen assumed the servicing agent obligations for the
Note at that time. He also stated that Ocwen has physical possession of the Note and is
maintaining physical possession of the Note in its capacity as the servicing agent for Deutsche.
Finally, Myers stated that, as of October 1, 2012, the Dases were forty-seven months behind on
their payment obligations and owed $366,185.92 on the Note.
Attached to the affidavit as business records were copies of the (1) original note endorsed
by New Century in blank; (2) the Deed of Trust; (3) the December 1, 2005 Assignment of Deed
of Trust from New Century to an unnamed assignee; and (4) the March 4, 2009 Assignment of
Note and Deed of Trust to Deutsche, signed by Nelson.
To recover on a debt due under a promissory note, a lender must establish that the note in
question exists, the debtor executed the note, the lender is the holder or owner of the note, and a
certain balance is due and owing on the note. Martin v. New Century Mortg. Co., 377 S.W.3d
79, 84 (Tex. App.—Houston [1st Dist.] 2012, no pet.). A “holder” is the “person in possession
of a negotiable instrument that is payable either to bearer or to an identified person that is the
person in possession.” TEX. BUS. & COM. CODE ANN. § 1.201(b)(21)(A) (West 2009). An
instrument containing a blank endorsement is payable to the bearer and may be negotiated by
transfer of possession alone. See id. § 3.205 (West 2002); Farkas v. Aurora Loan Svcs., LLC,
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No. 05-12-01095-CV, 2013 WL 6198344, at *4 (Tex. App.—Dallas Nov. 26, 2013, no pet. h.)
(mem. op.)
Here, Myers attached to his affidavit a copy of the original note endorsed by New
Century in blank. Myers also testified that Ocwen had physical possession of the Note and was
maintaining physical possession in its capacity as servicing agent for Deutsche. Moreover,
Myers swore that Deutsche acquired the Note from New Century. This evidence established
Deutsche was holder of the Note. See Farkas, 2013 WL 6198344, at *4 (concluding party was
“holder” of note because it was in possession of note that was endorsed payable to bearer at time
of foreclosure).
In reaching this conclusion, we reject the Dases’ argument that appellees are judicially
estopped from relying on the note endorsed in blank because Deutsche attached an unendorsed
note, made payable to the order of New Century, to a Proof of Claim in Anil’s bankruptcy
proceeding. They cite Hall v. GE Plastic Pacific PTE Ltd., 327 F.3d 391, 396 (5th Cir. 2003) for
the elements of judicial estoppel. The Hall court explained the doctrine as follows:
Judicial estoppel ‘prevents a party from asserting a position in a legal proceeding
that is contrary to a position previously taken in the same or some earlier
proceeding.’ The purpose of the doctrine is to prevent litigants ‘from playing
‘fast and loose’ with the courts . . . .’ In this Circuit, ‘two bases for judicial
estoppel’ must be satisfied before a party can be estopped. First, it must be shown
that ‘the position of the party to be estopped is clearly inconsistent with its
previous one; and [second,] that party must have convinced the court to accept
that previous position.’
327 F.3d at 396 (citations omitted).
As to the first element, the Dases argue Deutsche took the position in the bankruptcy
proceeding that the unendorsed version of the note (attached to the Proof of Claim) was true and
correct, which is inconsistent with its present position that the endorsed version of the note is
true and correct. Initially, we note our record does not show the unendorsed note was attached to
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the Proof of Claim. The documents are found under different exhibits in the record.1
Regardless, we agree with appellees the documents are not clearly inconsistent. In the
bankruptcy court, Deutsche filed a copy of the note as it existed at the time it was signed by the
Dases at closing. As sworn to by Myers, the original note was later endorsed in blank by New
Century. Thus, Deutsche produced an accurate copy of the note as it exists today in this
litigation.
As for the second element, the Dases argue the bankruptcy court “accepted [Deutsche’s]
claim regarding the unendorsed version of the Note.” They cite no evidence to support this
assertion and, when asked at oral argument, acknowledged any such evidence was outside the
record. We conclude the Dases have failed to raise a fact issue as to judicial estoppel. To the
extent they argue the unendorsed version of the note creates a material fact issue on Deutsche’s
status as holder, we disagree for the same reasons set out previously. Specifically, Myers
attested in his affidavit that the original note was later endorsed in blank by New Century, and
the Dases have not produced any evidence to controvert this statement.
Finally, the Dases argue the trial court erred in “failing to acknowledge the separation of
the note and deed of trust which rendered the security interest void.” This issue was not raised
below. According, it is waived. See TEX. R. CIV. P. 166a(c); City of Houston v. Clear Creek
Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). We conclude appellees have conclusively
established their entitlement to summary judgment.
1
A copy of the Proof of Claim is found in the Appendix of Summary Judgment Evidence Supporting Plaintiff’s Motion for Summary
Judgment as Exhibit G, but a copy of the Note is not attached. A copy of the Proof of Claim is also found in the Appendix of Summary Judgment
Evidence in Support of Plaintiff’s Response to Defendant’s Motion for Summary Judgment as Exhibit A; a copy of the unendorsed Note is found
in Exhibit B of the same pleading.
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We affirm the trial court’s judgment.
/Molly Francis/
121612F.P05 MOLLY FRANCIS
JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
ANIL DAS AND SHEELA DAS, On Appeal from the 101st Judicial District
Appellants Court, Dallas County, Texas
Trial Court Cause No. 11-07136-E.
No. 05-12-01612-CV V. Opinion delivered by Justice Francis;
Justices Moseley and Bridges participating.
DEUTSCHE BANK NATIONAL TRUST
COMPANY AS TRUSTEE UNDER
POOLING AND SERVICING
AGREEMENT DATED AS OF APRIL 1,
2005 MORGAN STANLEY ABS
CAPITAL I INC. TRUST 2006-NC3,
BARCLAYS CAPITAL REAL ESTATE
INC. D/B/A HOMEQ SERVICING, AND
OCWEN LOAN SERVICING, LLC,
Appellees
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED. It is ORDERED that appellees DEUTSCHE BANK NATIONAL TRUST
COMPANY AS TRUSTEE UNDER POOLING AND SERVICING AGREEMENT DATED
AS OF APRIL 1, 2005 MORGAN STANLEY ABS CAPITAL I INC. TRUST 2006-NC3,
BARCLAYS CAPITAL REAL ESTATE INC. D/B/A HOMEQ SERVICING, AND OCWEN
LOAN SERVICING, LLC, recover their costs of this appeal from appellants ANIL DAS AND
SHEELA DAS.
Judgment entered March 5, 2014
/Molly Francis/
MOLLY FRANCIS
JUSTICE
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