Trang v. Taylor Bean & Whitaker Mortgage Corp.

Citation:
Case No. 14-50281 (5th Cir. Jan. 7, 2015)
Tag(s):
Ruling:
AFFIRMED district court refusal to remand case because non-diverse defendant was improperly joined as there was no reasonable basis for the district court to predict that the plaintiff might be able to recover against defendant. The Fifth Circuit also affirmed denial of motion for default judgment because although defendant was technically in default, the allegations, even if true, failed to state a claim. The Fifth Circuit also held that rejection of an executory contract relates only to those aspects of the contract which remain unfilled as of the bankruptcy filing and does not invalidate the contract or treat the contract as if it did not exist.
Procedural context:
Lender TBW named MERS as beneficiary and nominee with right to foreclose and sell the property under deed of trust. Lender TBW went into bankruptcy and rejected its executory contracts. MERS assigned the deed of trust to U.S. Bank and ultimately foreclosure proceedings started. Plaintiff Trang filed suit in state court and U.S. Bank removed the case to district court. Plaintiff Trang moved to remand because Defendant Barrett Daffin like Trang was a Texas citizen. The district court denied the motion to remand because Barrett Daffin was improperly joined. In addition, Barrett Daffin was technically in default but the district court denied Plaintiff Trang's motion for default because, even if the allegations were true, the allegations failed to state a claim. Plaintiff Trang appealed these rulings to the United States Court of Appeals for the Fifth Circuit.
Facts:
Appeal arising out of state-law foreclosure dispute. Lender Taylor Bean & Whitaker Mortgage Corp. ("TBW") named MERS as beneficiary and nominee with right to foreclose and sell the property in deed of trust. Lender TBW subsequently went into bankruptcy and rejected its executory contracts. MERS assigned the deed of trust to U.S. Bank. Plaintiff Trang later defaulted on loan and U.S. Bank along with its counsel Barrett Daffin initiated foreclosure proceedings. Plaintiff then sued U.S. Bank, Barrett Daffin and TBW in state court. U.S. Bank removed the case to district court and the district court refused Plaintiff Trang's motions to remand and for entry of default judgment.
Judge(s):
Circuit Judges King, Jolly and Haynes.

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