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Johnson v. Ocwen Loan Servicing, L.L.C.

United States Court of Appeals, Fifth Circuit

February 21, 2019

TERESA ANN JOHNSON, Plaintiff - Appellant
v.
OCWEN LOAN SERVICING, L.L.C.; WELLS FARGO BANK NATIONAL ASSOCIATION, as Trustee for Park Place Securities Incorporated, Asset-Backed Pass-Through Certificates, Series 2005-WLLI, Defendants - Appellees

          Appeal from the United States District Court For the Northern District of Texas

          Before KING, HIGGINSON, and COSTA, Circuit Judges.

          GREGG COSTA, Circuit Judge.

         Parties typically may appeal only after a court has entered final judgment resolving all claims. But the growth of multiclaim and multiparty litigation led to Federal Rule of Civil Procedure 54(b), which allows entry of an appealable judgment on one or more claims even when trial court litigation remains for other claims. 10 Charles Alan Wright et al., Fed. Prac. & Proc. §§ 2653, 2654 (4th ed. 2014) (chronicling the history and purpose of Rule 54(b)). A partial final judgment is meant to prevent the "hardship and denial of justice through delay if each issue must await the determination of all issues as to all parties before a final judgment can be had." Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 511 (1950).

         This rule that is supposed to promote efficiency turned out to be a pitfall for the plaintiff in this mortgage foreclosure case. After the district court rejected all but one claim, it entered a Rule 54(b) judgment allowing an appeal before the final claim was resolved. But thirty days passed without an appeal. Only after the district court resolved the lingering claim and entered final judgment did the plaintiff appeal rulings from both judgments. We decide whether the missed deadline for appealing the Rule 54(b) judgment prevents the appellant from challenging those rulings in a later appeal from the final judgment.

         I.

         This case is about Teresa Johnson's home equity loan. Ocwen Loan Servicing began servicing the loan in 2011, and Wells Fargo owns the loan. Sometime in 2014, Johnson's husband lost his job and she fell behind in her loan payments. Johnson wanted a loan modification, but either she never completed the application or Ocwen failed to act on it. Eventually Ocwen sought an expedited foreclosure order in state court. Johnson filed this federal suit in response, which led to the dismissal of the foreclosure action.

         Johnson originally asserted five claims against Ocwen: three under the Texas Debt Collection Act and two under the federal Real Estate Settlement Procedures Act. [1] After receiving recommendations from the magistrate judge, the district court granted summary judgment for Ocwen on both federal claims and the two state claims that alleged misrepresentations in connection with debt collection. But it sent the remaining state claim, which relied on Texas's general prohibition on "threatening to take an action prohibited by law," Tex. Fin. Code § 392.301(a)(8), back to the magistrate judge for further scrutiny.

         On January 4, 2018, with the final claim still pending, the district court entered a Rule 54(b) judgment on the four dismissed claims.

         The remaining debt collection claim did not take long to resolve. By the end of the month, with the new magistrate report in hand, the district court granted summary judgment on that claim and entered final judgment on January 31.

         Johnson appealed on March 1, within 30 days of the January 31st final judgment but more than 30 days after entry of the Rule 54(b) judgment.

         II.

         Johnson's appeal focuses on the federal claims that were dismissed in that Rule 54(b) judgment. That partial final judgment started its own clock for filing a notice of appeal. Smith v. Mine Safety Appliances Co., 691 F.2d 724, 725 (5th Cir. 1982). Because Johnson filed her notice more than thirty days after entry of the Rule 54(b) judgment dismissing the Real Estate Settlement Procedures Act claims, her appeal of those rulings is untimely. Id.; see also Bowles v. Russell, 551 U.S. 205, 209 (2007) (noting that the time limit for appealing in civil cases is mandatory and jurisdictional).

         To try and avoid the time bar, Johnson argues that the Rule 54(b) judgment was unauthorized because: (1) the rule applies to cases with multiple claims but she only brought one, and (2) the district court failed to explain why it found "that there is no just reason for delay." Fed.R.Civ.P. 54(b). As a preliminary matter, we have doubts that an appeal of the final judgment allows a collateral attack on the propriety of a Rule 54(b) judgment from which an appeal was not taken. When dismissing untimely appeals of Rule 54(b) judgments, we have never evaluated a judgment's validity. See, e.g., Udeiwev. Texas Tech Univ., 733 Fed.Appx. 788, 791-92 (5th Cir. 2018); Martin v. Zoley, 603 Fed.Appx. 349, 350 (5th Cir. 2015); Smith, 691 F.2d at 725. That said, at least two circuits have allowed collateral attacks on the validity of a partial judgment when the appellant waits to appeal until after the final judgment. See Granack v. Continental Cas. Co., 977 F.2d 1143, 1145 (7th Cir. 1992) (holding that a Rule 54(b) judgment lacking the statement that there is "no just reason for delay" is defective and does not start the appellate clock); Page v. Pressier, 585 F.2d 336, 338 (8th Cir. 1978) (allowing a party appealing the final judgment to challenge a Rule 54(b) judgment on the ground that it "incorrectly categorized' the case as one involving multiple claims). The leading federal procedure treatise suggests that litigants facing an invalid Rule 54(b) judgment pursue another route for fixing it: file a timely notice of appeal from the judgment that argues, in addition to challenging the merits of the rulings, that the partial judgment is defective. 15A Wright et al., Fed. Prac. & Proc. ยง 3914.7, at ...


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