NewRez, LLC v. Greene et al

OCR transcription for search; preserved printed pages are authoritative

Case 4:25-cv-02423 Document 33 Filed 07/16/26 in TXSD Page 1of6
United States District Court

Southem District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT July 16, 2026
FOR THE SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk
HOUSTON DIVISION
§
NewRez, LLC d/b/a’ Shellpoint §
Mortgage Servicing, §
§
Plaintiff, § Civil Action No. 4:25-cev-2423
§
v. §
§
Lori D. Greene, et al., §
§
Defendants. §
§

MEMORANDUM AND RECOMMENDATION

This decision follows the Court’s show cause order raising concerns about
subject-matter jurisdiction. Dkt. 31. After considering Plaintiff NewRez,
LLC’s response, Dkt. 32, the pleading, and the applicable law, it is
recommended that this suit be dismissed for want of jurisdiction.

Background

NewRez filed this foreclosure action against Defendants Lori D. Greene,
the United States of America, and Sundown Glen Community Association, Inc.
Dkt. 1 (complaint). NewRez brings a breach of contract claim, asserting that
Greene defaulted on her loan that is secured by her property. See id. at 2-3.
And it alleges that the United States of America (through its officer, the

Secretary of Housing and Urban Development) has an interest in the subject

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property. 	See id. at 3. 	NewRez invoked federal question jurisdiction, citing
28 U.S.C. § 2410 as the sole basis for jurisdiction. See id. at 1; see also Dkt. 32
at 1 (“Plaintiff predicates this Court’s subject matter jurisdiction on the claims
it makes against the United States of America, and under 28 U.S.C. § 2410.”).
On February 4, 2026, NewRez moved for default judgment against
Greene. 	Dkt. 29. 	On June 30, 2026, the undersigned recommended that the
motion for default judgment be denied without prejudice. Dkt. 31. In the same
opinion, the undersigned ordered NewRez to show cause as to why the case
should not be dismissed for want of jurisdiction. 	See id. 	NewRez responded,
asserting that jurisdiction was proper. 	Dkt. 32. 	This Court now reviews
jurisdiction sua sponte.
Analysis
“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian
Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). 	“Therefore, United States
District Courts and Courts of Appeals have the responsibility to consider the
question of subject matter jurisdiction sua sponte if it is not raised by the
parties and to dismiss any action if such jurisdiction is lacking.” Giannakos v.
M/V Bravo Trader, 762 F.2d 1295, 1297 (5th Cir. 1985) (per curiam). Congress
has conferred federal courts with original jurisdiction over two categories of
cases: (1) federal questions “arising under the Constitution, laws, or treaties of
the United States,” 28 U.S.C. § 1331; and (2) suits between citizens of different
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states 	with 	an 	amount 	of 	controversy 	exceeding 	$75,000, 	see 	28 	U.S.C.
§ 1332(a). See Badgerow v. Walters, 596 U.S. 1, 7 (2022).
As 	the 	party 	asserting 	jurisdiction, 	NewRez 	bears 	the 	burden 	to
establish that jurisdiction is proper. 	See Life Partners, Inc. v. United States,
650 F.3d 1026, 1029 (5th Cir. 2011). 	But neither Newrez’s complaint nor its
response to the show cause order demonstrates that this Court has jurisdiction.
NewRez contends that that there is federal question jurisdiction under
28 U.S.C. § 2410 because it names the United States of America as a co-
defendant due its interest in the subject property. 	See Dkt. 1 at 1, 3; Dkt. 32
at 1. 	But this Court recently rejected that same jurisdictional theory in
Nationstar Mortgage, LLC, v. Abbott, 2026 WL 1765978 (S.D. Tex. Apr. 29,
2026) (holding Section 2410 did not confer federal jurisdiction over mortgage
suit), adopted by 2026 WL 1764856 (S.D. Tex. June 18, 2026) (Bennett, J.). The
analysis in Nationstar is on all fours here.
Section 2410 provides that “the United States may be named a party in
any civil action or suit in any district court, or in any State court having
jurisdiction of the subject matter ... to foreclose a mortgage or other lien upon
... real ... property on which the United States has or claims a mortgage or
other lien.” 28 U.S.C. § 2410(a). But under Fifth Circuit law, “Section 2410(a)
only waives sovereign immunity and does not create a basis for federal subject
matter jurisdiction.” 	Hussain v. Bos. Old Colony Ins. Co., 311 F.3d 623, 635
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(5th Cir. 2002) (emphasis added) (noting that the statute “must be narrowly
construed to comport precisely with congressional intent”). 	The Hussain
decision explained that Section 2410 works in conjunction with 28 U.S.C.
§ 1444, which “permits the government to remove to federal district court any
such case initiated in state court.” 	See id. at 629 (emphasis added). 	As
construed in Nationstar, Hussain’s rejection of Section 2410 as a basis for
federal question jurisdiction conclusively bars jurisdiction over NewRez’s suit.
Nationstar, 2026 WL 1765978 at *2 (collecting numerous authorities).
NewRez’s response to this Court’s show cause order raises the same
arguments that were considered and rejected in Nationstar. Like the mortgage
company 	in 	that 	case, 	NewRez 	maintains 	that 	Grable 	& 	Sons 	Metal
Productions, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005),
abrogated the Fifth Circuit’s characterization of Section 2410 in Hussain. See
Dkt. 32 at 2. 	Also identical to the mortgage company in Nationstar, NewRez
invokes a later—but unpublished—Fifth Circuit decision when claiming that
Section 2410 creates a federal cause of action. Id. (citing Bartolomeo USA, LLC
v. U.S. Dep’t of Hous. & Urban Dev., 2021 WL 5458117, at *2 (5th Cir. Nov. 22,
2021)). But just as Nationstar concluded, those positions are unpersuasive.
The Supreme Court’s decision in Grable merely observed in passing that
Section 2410 “provide[s] a quiet title cause of action against the Federal
Government” while dealing with an unrelated issue. 	See Grable, 545 U.S. at
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317 n.4. It neither analyzed nor addressed whether Section 2410 would permit
the action to be filed originally in federal court. See id. at 317 n.4 (stating that
Section 2410 was “not relevant” to the analysis); see also Lakeview Loan
Servicing, LLC v. Tennyson, 2026 WL 799709, at *3 (N.D. Tex. Mar. 23, 2026)
(noting 	that 	Grable’s 	observation 	was 	“nonbinding 	dicta” 	and 	dismissing
foreclosure action for lack of jurisdiction); Amerihome Mortg. Co., LLC v.
Lozano, 2025 WL 3532429, at *3 (N.D. Tex. Nov. 17, 2025) (holding Grable did
not overrule Hussain), adopted by 2025 WL 3530952 (N.D. Tex. Dec. 9, 2025);
Wilmington Sav. Fund Soc’y, FSB as Tr. of Stanwich Mortg. Loan Tr. I v. Leon,
2026 WL 374736, at *2 (N.D. Tex. Jan. 26, 2026) (footnote 4 was “dicta, not a
holding”), adopted by 2026 WL 372214 (N.D. Tex. Feb. 10, 2026).
Moreover, it is not for this Court to determine whether Hussain remains
good law. 	Only the Fifth Circuit can decide whether to revisit its own
precedent. 	See In re Bonvillian Marine Serv., Inc., 19 F.4th 787, 789-90 (5th
Cir. 2021) (district courts are “bound by the rule” in a published appellate
decision unless the circuit decides to overturn it, including based on an
intervening Supreme Court decision). 	Unpublished cases like Bartolomeo
cannot override Hussain’s binding force.
Because Hussain remains binding, Section 2410 does not provide a basis
for federal question jurisdiction. 	See Nationstar, 2026 WL 1765978 at *2; see
also, e.g., Planet Homes Lending, LLC v. Ernest Waterwall, 2026 WL 1084006,
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at *2 (S.D. Tex. Apr. 6, 2026) (same conclusion), adopted by 2026 WL 1081200
(S.D. Tex. Apr. 21, 2026); Tennyson, 2026 WL 799709, at *3 (“None of the
published Fifth Circuit cases ... concluded that Hussain was overturned by
Grable|.|”); Lakeview Loan Servicing LLC v. Lee, 2025 WL 3221472, at *2-3
(N.D. Tex. Oct. 22, 2025) (adhering to Hussain and dismissing mortgage suit
for lack of jurisdiction), adopted by 2025 WL 3218913 (N.D. Tex. Nov. 17, 2025).
This suit should be dismissed for want of jurisdiction.

Recommendation

For the foregoing reasons, it is RECOMMENDED that this suit be
DISMISSED WITHOUT PREJUDICE for lack of jurisdiction.

The parties have fourteen days from service of this Report and
Recommendation to file written objections. 28 U.S.C. § 636(b)(1); Fed.
R. Civ. P. 72(b). Failure to file timely objections will preclude
appellate review of factual findings and legal conclusions, except for
plain error. Ortiz v. City of San Antonio Fire Dep’t, 806 F.3d 822, 825
(5th Cir. 2015).

Signed on July 16, 2026, at Houston, Texas.

bom Ie

Yvodne Y. HAY
United States Magistrate Judge