Moore et al v. Federal National Mortgage Association et al

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
MIDLAND/ODESSA DIVISION
CHRISTINE M. MOORE and
MICHAEL MOORE,
Plaintiffs,
v.
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FANNIE MAE);
PRISCILLA ALMODOVAR; PETER
AKWABOAH; BARRETT DAFFIN
FRAPPIER TURNER & ENGEL, LLP;
JOSEPH M. VACEK; SHELLEY NAIL
TRUSTEE; OCWEN LOAN
SERVICING, LLC; MACKIE WOLF
ZIENTZ & MANN, PC; ISRAEL
SAUCEDO; ALDRIDGE PITE LLP;
WILLIAM JARRELL; PAUL
MARCHUK; TREVOR SHOELS;
FREEDOM MORTGAGE
CORPORATION; DAVID COBOS; and
MARVIN MOORE;
Defendants.
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MO:25-CV-00326-DC-RCG
REPORT AND RECOMMENDATION OF THE U.S. MAGISTRATE JUDGE
BEFORE THE COURT is Defendant Shelley Nail’s (“Defendant Nail”) Motion to
Dismiss. (Doc. 25).1 This case is before the Court through a Standing Order pursuant to
28 U.S.C. § 636 and Appendix C of the Local Court Rules for the Assignment of Duties to
United States Magistrate Judges. After due consideration of the Parties’ briefs and the case law,
the Court RECOMMENDS Defendant Nail’s Motion to Dismiss be DENIED AS MOOT
(Doc. 25) and Defendant Nail be DISMISSED AS A PARTY WITHOUT PREJUDICE.
I. BACKGROUND
On May 9, 2025, Plaintiffs Christine and Michael Moore (“Plaintiffs”) filed their Original
Petition in the 385th Judicial District Court of Midland County, Texas, asserting claims for
wrongful foreclosure, quiet title, fraud, and civil rights violations. (Doc. 1-1 at 12). Providing
1. All page number citations are to CM/ECF generated pagination unless otherwise noted.
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little factual detail, Plaintiffs broadly allege on December 15, 2015, the abovenamed defendants
foreclosed on their real property located at 1001 S. County Road 1060, Midland, Texas 79706
(“Property”) without clear and lawful authority to do so. Id. Plaintiffs further allege “Defendants
fabricated, forged, and recorded false documents to falsely assert ownership rights” and that they
were forcibly evicted at gunpoint from their home based on fraudulent claims. Id. Plaintiffs also
contend subsequent eviction proceedings were wrongfully initiated by Freedom Mortgage
Corporation without lawful authority. Id. Based on these allegations, Plaintiffs seek actual
damages in the amount of $11,140,287.36, emotional distress damages alleged to exceed $250
million, and unspecified punitive, exemplary, constitutional and civil rights damages. Id.
After the action was removed to this Court, Defendant Nail filed the instant Motion to
Dismiss requesting the Court dismiss her from this lawsuit without prejudice under Section
51.007 Texas Property Code. (Doc. 25 at 2). Plaintiffs timely filed their Response. (Doc. 26).
Accordingly, Defendant Nail’s Motion to Dismiss is ripe for disposition.
II. DISCUSSION
Defendant Nail moves to dismiss Plaintiffs’ claims under Section 51.007 of the Texas
Property Code, arguing the statute mandates dismissal without prejudice where a plaintiff fails to
file a verified response within thirty days of the trustee’s filing of a verified denial. (Doc. 25 at
2). Before reaching the merits of those arguments, however, the Court must first determine
whether it has subject matter jurisdiction over Defendant Nail to do so. For the reasons discussed
below, the Court concludes it does not.
A removing party can establish federal jurisdiction based on 28 U.S.C. § 1332 by
demonstrating that an in-state defendant has been “improperly joined.” Smallwood v. Ill. Cent. R.
Co., 385 F.3d 568, 573 (5th Cir. 2004). The burden is on the removing party, and the burden of
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demonstrating improper joinder is a heavy one. Cuevas v. BAC Home Loans Servicing, LP,
648 F.3d 242, 249 (5th Cir. 2011). Here, the Court has already determined Defendants PHH
Mortgage Corporation2 and Federal National Mortgage Association met that burden and
demonstrated Defendant Nail was improperly joined. (Doc. 27).
When a court determines a nondiverse party has been improperly joined to defeat
diversity that party “must be dismissed without prejudice.” Int’l Energy Ventures Mgmt., LLC v.
United Energy Grp., Ltd., 818 F.3d 193, 209 (5th Cir. 2016). This is because, if subject-matter
jurisdiction is based on diversity, a court never has jurisdiction over a nondiverse party. Id. As
the Supreme Court has explained “the presence in the action of a single plaintiff from the same
State as a single defendant deprives the district court of original diversity jurisdiction over the
entire action.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005).
Accordingly, so long as a nondiverse party remains joined, the only issue the Court may consider
is its own jurisdiction. Int’l Energy Ventures, 818 F.3d at 209. This is because “a federal
court always has jurisdiction to determine its own jurisdiction.” United States v. Ruiz, 536 U.S.
622, 622, (2002). The improper joinder inquiry is therefore strictly jurisdictional and focuses not
on the merits of the plaintiff’s claims, but on whether there is any reasonable basis to predict
recovery against the nondiverse defendant under state law. Smallwood, 385 F.3d at 573.
In conducting this inquiry, the court considers only whether the claims against the
nondiverse party would have survived absent the jurisdictional bar—not whether such claims
ultimately did survive. Int’l Energy Ventures, 818 F.3d at 210. If the claims would not have
survived, they are disregarded for purposes of determining jurisdiction; if they would have
survived, they must be considered. Id. In either circumstance, however, the inquiry serves solely
2. Defendant PHH notes the Original Petition incorrectly names “Ocwen Loan Servicing, LLC.” (Doc. 1). Ocwen is
no longer a legal entity, and PHH Mortgage Corporation—Ocwen’s successor by merger—appears on its behalf. Id.
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to resolve jurisdiction, not to adjudicate the merits. Thus, the only ground for dismissing any
improperly joined, nondiverse party is lack of subject matter jurisdiction—to dismiss on any
other basis would require the presence of jurisdiction that does not exist. See id. And unlike a
dismissal under Rule 12(b)(6), which operates as an adjudication on the merits, a dismissal for
lack of subject-matter jurisdiction does not. FED. R. CIV. P. 41(b) (“[A] dismissal under [Rule
41(b)] and any dismissal not under [Rule 41]—except one for lack of jurisdiction, improper
venue, or failure to join a party under Rule 19—operates as an adjudication on the merits.”).
Accordingly, when a nondiverse defendant is improperly joined, dismissal must be without
prejudice. Int’l Energy Ventures, 818 F.3d at 210.
Here, after denying Plaintiffs’ Motion to Remand on the basis that Defendant Nail was
improperly joined (Doc. 29), the Court no longer retained jurisdiction over Defendant Nail. As a
result, the Court lacks subject matter jurisdiction to reach the merits of Defendant Nail’s Motion
to Dismiss. See Int’l Energy Ventures, 818 F.3d at 210. Accordingly, the Court
RECOMMENDS Defendant Nail be DISMISSED for lack of jurisdiction and her Motion to
Dismiss be DENIED AS MOOT. See id. (instructing a similar motion to dismiss by an
improperly joined, nondiverse party should have been denied as moot once the district court
determined the party was improperly joined).
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III. RECOMMENDATION
In accordance with the above discussion, the Court RECOMMENDS Defendant Nail be
DISMISSED AS A PARTY WITHOUT PREJUDICE. The Court further RECOMMENDS
Defendant Nail’s Motion to Dismiss be DENIED AS MOOT. (Doc. 25).
SIGNED this 13th day of January, 2026.
RONALD C. GRIFFIN
UNITED STATES MAGISTRATE JUDGE
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INSTRUCTIONS FOR SERVICE AND NOTICE OF RIGHT TO APPEAL/OBJECT
In the event that a party has not been served by the Clerk with this Report and
Recommendation electronically, pursuant to the CM/ECF procedures of this District, the Clerk is
ORDERED to mail such party a copy of this Report and Recommendation by certified mail.
Pursuant to 28 U.S.C. § 636(b)(1), any party who desires to object to this report must serve and
file written objections within fourteen (14) days after being served with a copy. A party filing
objections must specifically identify those findings, conclusions, or recommendations to which
objections are being made; the District Judge need not consider frivolous, conclusive, or general
objections. Such party shall file the objections with the Clerk of the Court and serve the
objections on all other parties. A party’s failure to file such objections to the proposed findings,
conclusions, and recommendations contained in this report shall bar the party from a de novo
determination by the District Judge. Additionally, a party’s failure to file written objections to
the proposed findings, conclusions, and recommendations contained in this report within
fourteen (14) days after being served with a copy shall bar that party, except upon grounds of
plain error, from attacking on appeal the unobjected-to proposed factual findings and legal
conclusions accepted by the District Judge. Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415,
1428–29 (5th Cir. 1996).
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