Steven Crear, Sr. v. Mortgage Electronic Systems ( 2011 )

Case: 10-10875 Document: 00511425815 Page: 1 Date Filed: 03/28/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 28, 2011
No. 10-10875
Summary Calendar Lyle W. Cayce
Clerk
STEVEN CREAR, SR., Secured Party,
Plaintiff – Appellant
v.
JP MORGAN CHASE BANK N.A.,
Defendant – Appellee
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:10-CV-463
Before HIGGINBOTHAM, SMITH, and HAYNES, Circuit Judges.
PER CURIAM:*
In this diversity case, Steven Crear, Sr., a pro se plaintiff, appeals a grant
of summary judgment in favor of JPMorgan Chase Bank. Crear sued JPMorgan
and several co-defendants for violating multiple Texas consumer protection laws
when they refused to produce an original note or deed of trust before initiating
foreclosure proceedings. Because of these violations as well as unmet unilateral
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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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demands that Crear believed created a contract, Crear asserted the defendants
owed him $65 million. On appeal, Crear challenges the district court’s
jurisdiction and in the alternative contends that the contract obligated
JPMorgan to pay him. We disagree and AFFIRM summary judgment. Crear
also challenges the dismissal of his claims against three co-defendants, which we
DISMISS for lack of jurisdiction.
I.
To purchase property in Dallas, Crear executed a promissory note through
Washington Mutual Bank, which was secured with a concurrent deed of trust
encumbering the property. In 2009, foreclosure proceedings were initiated on
the property, and Crear received a letter indicating the payoff amount required
to prevent the foreclosure. Crear responded by sending foreclosure counsel a
copy of the letter, upon which Crear wrote illegible and confusing language. It
appears Crear intended this document to be valued at $136,633.24—the required
payoff amount—but the document was not legal tender.
Along with the copy of the letter, Crear sent a document entitled
“Conditional Acceptance Administrative Procedure,” which cited incoherent case
law from a variety of jurisdictions in an attempt to suggest the defendants had
violated the Truth in Lending Act. The document then listed thirty-two
demands, including producing the original promissory note for Crear to review.1
Lastly, the Conditional Acceptance stated “[f]ailure to reply will result in a
1
The Texas Property Code provides that either a mortgagee or mortgage servicer may
administer a deed of trust foreclosure without production of the original note. See TEX . PROP .
CODE ANN . §§ 51.002, 51.0025 (establishing the notice required prior to a foreclosure sale
pursuant to a power of sale).
2
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complete Administrative Process,” with compensatory penalties up to four times
the principal amount of the loan and punitive damages up to two hundred times
the compensatory amount. The letter did not provide any legal authority for
these damages nor did it explain what administrative process Crear intended to
follow.
When Washington Mutual did not respond to Crear’s Conditional
Acceptance, he sent foreclosure counsel a letter stating “your client is now at
fault and in agreement to the claim and lien at the ‘sum certain’ as so claimed.”
Further, the letter stated that Washington Mutual agreed to the Conditional
Acceptance by its “silence, agreement and general acquiescence.” A few days
later Crear sent a letter stating that by remaining silent, Washington Mutual
“fully agreed” that it owed Crear over $65 million in damages.
In December 2009, Crear filed suit in state court against JPMorgan,
Washington Mutual, Deutsche Bank National Trust Company, and Mortgage
Electronic Registration Systems, Inc. (MERS). Crear sued for violations of the
Texas Property Code, the Texas Business and Commerce Code, the Texas
Finance Code, and the Texas Deceptive Trade Practices Act, as well as common
law claims. JPMorgan, the only defendant to appear, removed the action on
diversity grounds and filed a motion for summary judgment in May 2010. Crear
failed to respond to the summary judgment motion and instead challenged the
district court’s jurisdiction. On July 22, the magistrate judge recommended that
JPMorgan’s motion be granted. On August 13, the magistrate judge
recommended that Crear’s claims against MERS, Deutsche Bank, and
Washington Mutual be dismissed for his failure to serve these defendants. On
August 19, the district court granted summary judgment in favor of JPMorgan.
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Crear timely filed his notice of appeal on August 27. On September 10, the
district court dismissed Crear’s claims against MERS, Deutsche Bank, and
Washington Mutual.
II.
We review a grant of summary judgment using the same standard of
review as the district court.2 A court “shall grant summary judgment 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 An issue as to a material
fact is genuine “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.”4 A moving party may show there is no genuine
issue for trial by pointing out the absence of evidence supporting the nonmoving
party’s case.5 The nonmoving party, who will have the burden of proof at trial,
must then come forward with summary judgment evidence establishing the
existence of a genuine issue. We consider all evidence “in the light most
favorable to the party resisting the motion.” 6
We hold pro se briefs to less stringent standards than formal pleadings
drafted by lawyers.7 However, pro se litigants must brief the arguments in order
2
See Holtzclaw v. DSC Communications Corp., 255 F.3d 254, 257 (5th Cir. 2001).
3
Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986).
4
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
5
See Duffy v. Leading Edge Products, Inc., 44 F.3d 308, 312 (5th Cir. 1995).
6
Trevino v. Celanese Corp., 701 F.2d 397, 407 (5th Cir. 1983).
7
See, e.g., Haines v. Kerner, 404 U.S. 519, 520 (1972).
4
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to preserve them,8 and litigants should reasonably comply with the standards
of Rule 28 of the Federal Rules of Appellate Procedure.9
III.
A.
Crear first claims that the parties lacked complete diversity and therefore
the district court did not have jurisdiction. Specifically, Crear contends that
MERS is a citizen of Texas because it maintains a data center in Plano, Texas.
For diversity purposes, a corporation is only a citizen of the states in which it is
incorporated or maintains a principal place of business.10 A corporation “is not
deemed a citizen of every State in which it conducts business or is otherwise
amenable to personal jurisdiction.”11 If MERS maintained a data center in
Texas, it is subject to personal jurisdiction in that state, but for diversity
purposes, its citizenship is tied to its principal place of business (Virginia) or its
state of incorporation (Delaware). MERS is not a citizen of Texas.
The parties in this case are completely diverse. Crear is a citizen of Texas.
8
See Yohey v. Collins, 985 F.2d 222, 225 (5th Cir. 1993).
9
See id. at 224–25; see also Grant v. Cueller, 59 F.3d 523, 524 (5th Cir. 1995)
(“Although we liberally construe briefs of pro se litigants and apply less stringent standards
to parties proceeding pro se than to parties represented by counsel, pro se parties must still
brief the issues and reasonably comply with the standards of Rule 28.” (footnote omitted)).
10
See Wachovia Bank, N.A. v. Schmidt, 546 U.S. 303, 318 (2006) (citing 28 U.S.C. §
1332(c)(1)).
11
Id. at 317.
5
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JPMorgan is a citizen of Ohio, as designated by its articles of association.12
Deutsche Bank and Washington Mutual were both citizens of California. The
amount in controversy is not a disputed element. Accordingly, the district court
properly exercised diversity jurisdiction.
B.
Even if the district court had diversity jurisdiction, Crear argues that the
court should have abstained from deciding a matter of state law. We review a
district court’s decision not to abstain under an abuse of discretion standard.13
Crear relies on Burford v. Sun Oil Corp.14 to suggest that the district court
should have declined to exercise its jurisdiction. The Supreme Court considers
Burford abstention to be “an extraordinary and narrow exception to the duty of
the District Court to adjudicate a controversy properly before it.”15 Indeed,
“federal courts have a ‘virtually unflagging obligation . . . to exercise the
jurisdiction given them.’”16 The Court has held that Burford permits a federal
court to abstain from a case “only if it presents difficult questions of state law
12
See id. at 318 (finding that for diversity purposes a national bank is the citizen of the
state that its articles of association designate as its main office).
13
Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 144 (5th Cir.
2010).
14
319 U.S. 315 (1943).
15
Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 728 (1996) (internal quotation marks
omitted).
16
Wilson v. Valley Elec. Membership Corp., 8 F.3d 311, 313 (5th Cir. 1993) (quoting
Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)) (alteration
in original).
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bearing on policy problems of substantial public import . . . or if its adjudication
in a federal forum would be disruptive of state efforts to establish a coherent
policy with respect to a matter of substantial public concern.” 17
Our court recognizes five factors a court should weigh when deciding
whether to abstain under Burford:
(1) whether the cause of action arises under state or federal law . . . ;
(2) whether the case requires inquiry into unsettled issues of state
law, or into local facts; (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.18
This case involved well-settled principles of Texas state law. The mere fact that
allegations were asserted under state law does not mean that the district court
should have abstained. There were no complex regulatory matters that would
be better addressed in a state forum. Rather, the district court could ably apply
Texas law to the facts at hand. Further, the adjudication of Crear’s case in
federal court would not disrupt Texas’s interests in developing a coherent
consumer protection policy. Therefore, the district court did not abuse its
discretion in failing to abstain from deciding Crear’s claims.
C.
Crear does not challenge the district court’s legal conclusions on the Texas
statutory or common law claims. Nor does Crear explain why he failed to
properly respond to JPMorgan’s motion for summary judgment. Instead, his
challenge on the merits is limited to assertions that the district court improperly
17
Quackenbush, 517 U.S. at 726–27 (internal quotation marks and citations omitted).
18
Sierra Club, 627 F.3d at 144 (quoting Wilson, 8 F.3d at 313).
7
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made a credibility determination on Crear’s “Affidavit of Truth” and that the
district court deprived Crear of his right to file and enforce a commercial lien.
No document in the record is labeled “Affidavit of Truth,” and the district
court did not challenge the credibility of any of Crear’s affidavits explicitly.
Rather, the district court concluded that Crear had failed to produce competent
evidence to show a genuine issue of material fact for any of his claims. Crear
may be implying that the district court did not give full consideration to all the
statements in his affidavits. If so, the district court’s limited reliance on the
affidavits was proper. Crear’s assertions extended far beyond his personal
knowledge and such assertions could not be considered on summary judgment.19
Statements in the affidavit supported by Crear’s personal knowledge were
properly considered by the district court.
It is not apparent what Crear means by his right to file and enforce his
commercial lien, but he seems to assert that the Conditional Acceptance
Administrative Procedure he sent to foreclosure counsel created a contractual
obligation that required the defendants to pay him $65 million. Crear admits
that the defendants never agreed to the Conditional Acceptance Administrative
Procedure, but he contends that defendants obligated themselves to pay $65
million because they did not respond to Crear’s unilateral demands. Assuming
Crear’s document was an offer to contract with the defendants, the offer was
never accepted and no valid contract was created.20 The only valid contracts
between Crear and the defendants were the promissory note and deed of trust.
19
See Cormier v. Pennzoil Exploration & Prod. Co., 969 F.2d 1559, 1561 (5th Cir. 1992)
(holding that affidavits offered by a nonmoving party could not be considered at summary
judgment because they were not based on personal knowledge).
20
See 1 WILLISTON ON CONTRACTS § 4:1 (4th ed. 2010).
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Accordingly, the district court properly granted JPMorgan’s motion for summary
judgment.
IV.
JPMorgan was the only defendant that responded to the suit. After Crear
filed his appeal, the district court dismissed without prejudice Crear’s claims
against Deutsche Bank, MERS, and Washington Mutual because these parties
were not properly served. Crear failed to amend his notice of appeal to include
this judgment of dismissal, and as a result, JPMorgan contends that Crear
waived any right to challenge this finding. Our court follows “a policy of liberal
construction of notices of appeal . . . in situations where the intent to appeal an
unmentioned or mislabeled ruling is apparent and there is no prejudice to the
adverse party,”21 but we have previously held that an appellant could have no
intent to appeal an order that was filed after the appeal notice.22
Here, the magistrate judge’s report recommending dismissal of the co-
defendants was issued before the JPMorgan judgment that Crear appealed. In
the appealed order, the district court did not specifically accept the dismissal
recommendation for the co-defendants, but the judgment included a Fed. R. Civ.
P. Rule 54(b) explanation for why the court could issue a final judgment for only
21
C.A. May Marine Supply Co. v. Brunswick Corp., 649 F.2d 1049, 1056 (5th Cir. July
1981) (per curiam).
22
See Fiess v. State Farm Lloyds, 392 F.3d 802, 806–07 (5th Cir. 2004). In Fiess, the
order plaintiffs wished to appeal contained a new argument that was not proposed in the
arguments of the prior orders. In contrast, Crear appeals an order on a claim that was
intertwined with the final judgment. Cf. Trust Co. of La. v. N.N.P. Inc., 104 F.3d 1478, 1485
(5th Cir. 1997) (finding that a notice of “appeal from a final judgment sufficiently preserves
all prior orders intertwined with the final judgment”).
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one of the defendants. The judgment stated: “Because no other defendant has
been properly served or appeared herein, there is no just reason for delay.”
Under these circumstances, Crear, as a pro se plaintiff, might have believed that
the court was following the magistrate judge’s recommendation to dismiss the
other defendants, even though the court did not formally dismiss the defendants
until a few weeks later. Crear referenced the dismissal in his appellate brief and
included the final dismissal judgment in his record excerpts. JPMorgan, having
briefed the issue, was not prejudiced.
Nonetheless, Crear is here on the Rule 54(b) certificate, which necessarily
means that other parties remained after the entry of the challenged order.
Crear did not amend his appeal to include judgments other than the Rule 54(b)
grant of summary judgment; therefore, we do not have jurisdiction over the
appeal challenging the dismissal of Deutsche Bank, MERS, and Washington
Mutual.23
As Crear is pro se, we pause to explain that his challenge to the dismissal
of the remaining parties had little likelihood of success.24 Texas requires strict
compliance with its rules of service. “Actual notice to a defendant, without
23
See C.A. Marine Supply, 649 F.2d at 1056 (“Where the appellant notices the appeal
of a specified judgment only . . . this court has no jurisdiction to review other judgments or
issues which are not expressly referred to and which are not impliedly intended for appeal.”).
24
Crear offered the district court no explanation for his failing to serve Deutsche Bank
and did not explicitly challenge Deutsche’s dismissal in his appellate brief. Even without the
jurisdictional constraints, our court could not consider any challenge to Deutsche Bank’s
dismissal. See McClellon v. Lone Star Gas Co., 66 F.3d 98, 100 (5th Cir. 1995) (holding that
“[g]enerally, appellate courts will not consider issues not urged in the district court except
when the failure to do so would result in grave injustice” and noting that this rule applies to
pro se plaintiffs); see also Al-Ra’id v. Ingle, 69 F.3d 28, 31 (5th Cir. 1995) (finding that a pro
se plaintiff abandoned a claim when his brief does not inform the appellate court of what
alleged error the district court made).
10
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proper service, is not sufficient to convey upon the court jurisdiction to render
default judgment against him.”25 Further, “jurisdiction is dependent upon
citation issued and served in a manner provided for by law.”26 Texas law
provides that a plaintiff may serve a nonresident defendant using the Texas
long-arm statute when the nonresident fails to maintain a registered agent for
service of process.27 Washington Mutual maintained a registered agent in Texas.
Crear did not first attempt to serve this agent, as required by Texas law.28
MERS did not maintain a registered agent in Texas. The Texas long-arm
statute requires that documents submitted to the Secretary of State for service
indicate the nonresident’s home office address.29 Under Texas law, service is not
effective “[i]f nothing on the face of the record shows the forwarding address was
the defendant’s home or home office.”30 The home office of MERS is in Virginia.
The record reflects that Crear did not provide the Secretary of State with this
address.
25
Wilson v. Dunn, 800 S.W.2d 833, 836 (Tex. 1990).
26
Id.
27
TEX . CIV . PRAC . & REM . CODE ANN . § 17.044.
28
See McKanna v. Edgar, 388 S.W.2d 927, 929 (Tex. 1965) (holding that before the
Secretary of State may be substituted for service, the plaintiff must demonstrate that the
defendant has no designated agent upon whom service may be made); Mobilevision Imaging
Servs., LLC v. LifeCare Hosps. of N. Tex., 260 S.W.3d 561, 565 (Tex. App. 2008—Dallas 2008,
no pet.) (reversing a default judgment when the plaintiff served the defendant through the
long-arm statute but did not allege that the defendant had failed to designate or maintain a
resident agent for service of process).
29
TEX . CIV . PRAC . & REM . CODE ANN . § 17.045(a).
30
Wachovia Bank of Del., N.A. v. Gilliam, 215 S.W.3d 848, 849 (Tex. 2007) (internal
quotation marks omitted).
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V.
The district court’s grant of summary judgment in favor of JPMorgan is
AFFIRMED, and the appeal from the dismissal without prejudice of Deutsche
Bank, MERS, and Washington Mutual is DISMISSED for want of jurisdiction.
12