Filed: Sep. 30, 2020
Latest Update: Sep. 30, 2020
Summary: Case: 20-20227 Document: 00515583969 Page: 1 Date Filed: 09/30/2020 United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED September 30, 2020 No. 20-20227 Lyle W. Cayce Summary Calendar Clerk Rodney E. Underwood, Plaintiff—Appellant, versus Ocwen Loan Service, Defendant—Appellee. Appeal from the United States District Court for the Southern District of Texas USDC No. 4:18-CV-4593 Before Wiener, Southwick, and Duncan, Circuit Judges. Per Curiam:* A
Summary: Case: 20-20227 Document: 00515583969 Page: 1 Date Filed: 09/30/2020 United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit FILED September 30, 2020 No. 20-20227 Lyle W. Cayce Summary Calendar Clerk Rodney E. Underwood, Plaintiff—Appellant, versus Ocwen Loan Service, Defendant—Appellee. Appeal from the United States District Court for the Southern District of Texas USDC No. 4:18-CV-4593 Before Wiener, Southwick, and Duncan, Circuit Judges. Per Curiam:* A ..
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Case: 20-20227 Document: 00515583969 Page: 1 Date Filed: 09/30/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
September 30, 2020
No. 20-20227 Lyle W. Cayce
Summary Calendar Clerk
Rodney E. Underwood,
Plaintiff—Appellant,
versus
Ocwen Loan Service,
Defendant—Appellee.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:18-CV-4593
Before Wiener, Southwick, and Duncan, Circuit Judges.
Per Curiam:*
A homeowner sued to prevent foreclosure on his home, arguing that
the relevant statute of limitations had expired under Texas law. The district
court dismissed the case as being barred by res judicata, denied a motion for a
*
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opinion should not be published and is not precedent except under the limited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. 20-20227
new trial, and required plaintiff’s counsel to refund his fees to his client. We
AFFIRM.
FACTUAL AND PROCEDURAL HISTORY
Rodney Underwood owned property in Houston, Texas, for which he
executed a promissory note and security instrument. U.S. Bank on April 19,
2010 filed an application for an expedited order of foreclosure in state court
on this property. In 2012, Underwood brought suit in state court regarding a
different property and a different loan servicer. At this time, Ocwen Loan
Servicing was not a named party in the suit, but in 2013, Underwood
amended his complaint to name Ocwen and another defendant and to alter
the claim to prevent foreclosure on the same property that U.S. Bank had
sought to foreclose on in 2010, which also is the property that is the focus of
this appeal. In March 2014, U.S. Bank intervened in the suit Underwood
filed in 2012 and counterclaimed, seeking a judicial foreclosure. Final
judgment in Underwood’s 2012 lawsuit was entered in November 2014,
ordering judicial foreclosure on the property at issue in the case now before
this court. Underwood’s appeal was dismissed as untimely, and the mandate
from the appellate court issued in June 2016.
In October 2018, the state trial court that had ordered foreclosure in
2014 issued an order allowing the sale of the property. Just one day before
the scheduled foreclosure sale, Underwood pro se filed this lawsuit in the
federal district court, and another one in state court. Underwood asked the
federal district court for a declaratory judgment that the lien was invalid and
that foreclosure was prohibited because Ocwen had failed to enforce the lien
within four years from when it accelerated the loan. Ocwen sought dismissal
of this claim.
Underwood’s counsel failed to attend the hearing regarding the
motion to dismiss. The district court dismissed the case with prejudice as
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barred by res judicata. As part of the order dismissing the case, the district
court required Underwood’s counsel to refund fees to his client. Underwood
then filed a motion for a new trial, which the district court denied.
Underwood appealed.
DISCUSSION
Underwood seeks review of three rulings from the district court.
First, he argues that the district court improperly dismissed the claim as
barred by res judicata. Second, he contends that the district court’s rejection
of the motion for a new trial was in error. Third, he seeks reversal of the
district court’s sanction. We discuss the arguments in that order.
I. Dismissal of the claim
We “review[] a district court’s dismissal under Federal Rule of Civil
Procedure 12(b)(6) de novo.” Harris Cnty. Tex. v. MERSCORP Inc., 791 F.3d
545, 551 (5th Cir. 2015). Under this review, we are “accepting all well-
pleaded facts as true and viewing those facts in the light most favorable to the
plaintiff.”
Id. (citation omitted). Our affirmance can be based “on any
grounds raised below and supported by the record.”
Id.
The district court dismissed this case as barres by res judicata. “A
federal court asked to give res judicata effect to a state court judgment must
apply the res judicata principles of the law of the state whose decision is set
up as a bar to further litigation.” E.D. Sys. Corp. v. Sw. Bell Tel. Co.,
674 F.2d
453, 457 (5th Cir. 1982). Because a Texas state court issued the 2012 final
judgment, we turn to Texas law. The party asserting res judicata must show
the following:
(1) a prior final judgment on the merits by a court of competent
jurisdiction; (2) identity of parties or those in privity with
them; and (3) a second action based on the same claims as were
raised or could have been raised in the first action.
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Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996). A district
court’s determination of res judicata is reviewed de novo. Davis v. Dallas Area
Rapid Transit,
383 F.3d 309, 313 (5th Cir. 2004).
First, the 2012 suit resulted in a final judgment in 2014, and neither
party has questioned jurisdiction. Second, both Ocwen and Underwood were
parties to the 2012 suit once Underwood amended the complaint. The third
element presents at least some question for us. To determine whether the
same claims are involved, Texas applies the transaction test. Barr v.
Resolution Corp., 837 S.W.2d 627, 631 (Tex. 1992). When claims “arise[] out
of the same subject matter of a previous suit,” they are deemed to be from
the same transaction.
Id.
The 2012 claim involved the same property as this case. There, U.S.
Bank counterclaimed to foreclose on the property, and here, Underwood
seeks to prevent foreclosure on the same property. Underwood attempts to
circumvent res judicata’s preclusive effect by arguing there was a “material
change in circumstances when the statute of limitations ran” on the right to
foreclose. That argument is based on a Texas statute that provides that suit
must be brought for “the recovery of real property under a real property lien
or the foreclosure of a real property lien not later than four years after the day
the cause of action accrues.” Tex. Civ. Prac. & Rem. Code §
16.035(a). The argument in district court was that because the loan was
accelerated in April 2010, the judicial foreclosure suit needed to be brought
by April 2014.
In the 2012 litigation that we have described, involving the same
parties and the same property, no argument about the statute of limitations
was made. Final judgment was not entered in that suit until November 2014,
seven months after the alleged running of the statute of limitations in April
2014. On appeal, Underwood argues for the first time that he had been in
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bankruptcy at some point, and as a result, U.S. Bank “lost the ability to either
bring suit or actually conduct the sale in late 2015 or early 2016.” There was
no mention of bankruptcy in district court, and no record made. We will not
consider this new argument. The issue of the running of the statute of
limitations was an argument that could have been, but was not, made in the
earlier litigation. Res judicata bars it now. 1
Res judicata applies, and the district court properly dismissed the suit.
II. Motion for new trial
We review the denial of a motion for new trial for clear abuse of
discretion. Carr v. Wal-Mart Stores, Inc., 312 F.3d 667, 670 (5th Cir. 2002).
“Generally, this court has held that the trial court should not grant a motion
for new trial unless there would be a miscarriage of justice or the weight of
evidence preponderates against the verdict.” United States v. Wall,
389 F.3d
457, 466 (5th Cir. 2004).
Underwood “presented no new evidence or otherwise show[ed] a
change of circumstances sufficient to reverse the dismissal of the case” in his
motion for a new trial. In fact, Underwood’s briefing on the motion relied on
the same arguments already heard and rejected in the district court’s
consideration of the motion to dismiss. The district court did not clearly
abuse its discretion in denying the motion for a new trial.
III. Sanctions
The appropriate standard of review for an award of sanctions is abuse
of discretion. Chaves v. M/V Medina Star, 47 F.3d 153, 156 (5th Cir. 1995).
1
Ocwen makes other arguments about the appropriate limitations statute for
judicial foreclosure as opposed to that under a power of sale in a deed of trust, and how the
accrual of the claim differs. There is no need to consider those points.
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An abuse of discretion occurs when the district court rules “based on an
erroneous view of the law or on a clearly erroneous assessment of the
evidence.” Id.
The record contains little information on the sanction. The specific
legal basis on which the district court relied is not clear. The relevant order
simply states, “Underwood’s attorney . . . must remit Underwood’s fee.”
As for the factual basis, the district court’s order mentions that Underwood’s
attorney missed the hearing and failed to communicate to the court that he
would be absent. The order also states that the attorney “should not have
filed this unprincipled suit” and concludes that “[i]f Underwood wants a
hearing, it will be on sanctions.”
We cannot conclude that the district court abused its discretion in
issuing this sanction. The district court identified both that Underwood’s
attorney missed the hearing on the motion to dismiss without prior
communication to the court and that the suit was “unprincipled” as the basis
for the sanction. Underwood contends that the original filings were pro se and
that an attorney was not retained until months later. Even so, Underwood
fails to acknowledge that after acquiring representation, Underwood moved
to amend the complaint. The amended complaint is what was subject to the
district court’s dismissal. We find no abuse of discretion.
AFFIRMED.
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