Kalkan et al v. Federal National Mortgage Association (Fannie Mae) et al

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
FERCAN E KALKAN, et al., §
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Plaintiffs,
VS. CIVIL ACTION NO. 4:24-cv-2548
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FANNIE MAE), et al.,
Defendants.
MEMORANDUM AND RECOMMENDATION ON
MOTION FOR TEMPORARY RESTRAINING ORDER
Before this Court is Plaintiffs’ Emergency Motion for Temporary Restraining
Order and Application for Temporary Injunction.1 ECF 98. After reviewing the
pleadings, the applicable law, and hearing oral arguments, this Court
RECOMMENDS that Plaintiffs’ Motion for Temporary Restraining Order be
DENIED.
I. Background
The case centers on a multi-family unit property located at 2601 Lazy Hollow
Drive, Houston, Texas 77063 (the “Property”). Plaintiffs Fercan E. Kalkan
(“Kalkan”) and Piney Point 2023 LLC (“Piney Point”) currently own the Property,
1 The District Judge referred this case to the undersigned Magistrate Judge pursuant to 28 U.S.C.
§ 636(b)(1)(A) and (B) and the Cost and Delay Reduction Plan under the Civil Justice Reform Act.
ECF 5.
United States District Court
Southern District of Texas
ENTERED
January 06, 2026
Nathan Ochsner, Clerk
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and Fannie Mae holds a deed of trust on the Property securing a $73,893,00 loan.
Fannie Mae, asserting multiple defaults under the loan agreement, served a Notice
of Default and Demand for Cure on April 16, 2024 and a Notice of Acceleration on
May 17, 2024. ECF 19 ¶20; ECF 98 at 7; ECF 50-7; ECF 50-8.
On January 6, 2025, Piney Point instituted a bankruptcy proceeding. In re
Piney Point 2023 LLC, Case No. 25-30128 (Bankr. S.D. Tex.). ECF 47. This case
was stayed while the automatic stay applied to the Property. ECF 48. On August 8,
2025, the Bankruptcy Court entered a Stipulation and Order which gave Piney Point
until November 15, 2025 to consummate a sale of the property which would generate
sufficient proceeds to satisfy its obligations to Fannie Mae. ECF 50-12 ¶¶ 1-2. The
Bankruptcy Court’s Order stated that if Piney Point failed to pay Fannie Mae in full
by 11:59 p.m. on November 15, 2025, the automatic stay would terminate “thereby
allowing Fannie Mae to exercise any and all of its rights and remedies under the
Loan Documents as to the Property, including without limitation, foreclosure.” Id.
at ¶ 3. The automatic stay terminated on November 15, 2025, allowing Fannie Mae
to successfully move for: appointment of a Receiver for the Property; a TRO
enjoining interference with the Receiver; and a subsequent Temporary Injunction.
ECF 64; ECF 92. The Court’s Order Appointing Receiver precludes any person or
entity from interfering with the Receivership Property, “except with respect to
[among other things] Fannie Mae’s right to foreclose its Deed of Trust on the
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Receivership Property…” ECF 63 at 8. In addition, the Temporary Restraining
Order entered by the Court noted that “foreclosure by Fannie Mae appears to be
imminent.” ECF 64 at 2. On December 15, 2025, Fannie Mae issued a Notice of
Foreclosure, noticing a foreclosure sale of the Property for 10:00 a.m. on January 6,
2025. ECF 98 at 32-47.
Plaintiffs filed the current Motion for Temporary Restraining Order on
Sunday, January 4, 2025—more than two months after the expiration of the
automatic stay, the appointment of the Receiver and the entry of the TRO, and more
than two weeks after Fannie Mae issued the December 15, 2025 Notice of
Foreclosure. The Court conducted a hearing on the record at 8:00 a.m. on January
6, 2025. This Memorandum and Recommendation incorporates the reasons stated
on the record at the hearing for the Court’s recommendation that the TRO be denied.
II. Analysis
Plaintiffs have known that foreclosure was possible at least since Fannie Mae
accelerated the debt in May 2024; have known that foreclosure was likely since the
Bankruptcy Court lifted the automatic stay on November 15, 2025; and have known
that foreclosure was imminent since Fannie Mae issued the December 15, 2025,
Notice of Foreclosure. The Bankruptcy Court previously gave Plaintiffs until
November 15, 2025 to close on a sale of the Property and pay the debt in full before
lifting the automatic stay. ECF 50-12. Plaintiffs did not meet the deadline to pay
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the debt and the automatic stay terminated at 11:59 p.m. on November 15, 2025. Id.
In addition, this Court recognized that Fannie Mae intended to foreclose when it
expressly excepted Fannie Mae’s right to foreclose its Deed of Trust from the stay
prohibiting all person and entities from taking any action against the property during
the Receivership. ECF 63 at 8. Yet, Plaintiffs did not seek a TRO until two days
before the scheduled foreclosure sale.
The purpose of a TRO is to preserve the status quo and prevent irreparable
harm until the court makes a final decision on injunctive relief. Granny Goose
Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Loc. No. 70 of Alameda Cnty.,
415 U.S. 423, 439 (1974). To obtain a TRO, an applicant must satisfy the following
four elements: (1) substantial likelihood of success on the merits; (2) substantial
threat of irreparable injury; (3) the threatened injury outweighs any harm the order
might cause to the defendant; and (4) the injunction will not disserve the public
interest. Enrique Bernat F., S.A. v. Guadalajara, Inc., 210 F.3d 439, 442 (5th Cir.
2000). The decision of whether to grant or deny a TRO is within the Court's
discretion. Moore v. Brown, 868 F.3d 398, 402 (5th Cir. 2017).
A. Plaintiffs have not established a likelihood of success on the merits.
First, Plaintiffs have not established a substantial likelihood of success on the
merits. Plaintiffs have admitted default. ECF 101-1 at 4. As noted in this Court’s
prior Order Appointing Receiver, Fannie Mae has a right to foreclose on the Deed
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of Trust. ECF 63 at 8 (staying actions against the Property “except with respect to
Fannie Mae's right to foreclose its Deed of Trust on the Receivership Property”).
Plaintiffs have not shown a likelihood of success on its alleged claim that it is not in
default due to force majeure. As noted on the record at the hearing, force majeure
events occurred only after the initial notice of default and acceleration which form
the basis for the foreclosure action.
Plaintiffs have not demonstrated a prior material breach by Fannie Mae and
in fact have not even asserted that claim or defense in this suit. See ECF 19 ¶ 35
(alleging that Fannie Mae breached the Loan Documents by “attempts to
manufacture defaults,” not by anything prior to Plaintiffs’ default). Furthermore,
Plaintiffs failed to present any evidence demonstrating that Fannie Mae wrongfully
withheld escrowed funds in the repair account. The Court agrees that Plaintiffs’
argument that Fannie Mae waived the right to foreclose by accepting payments
ordered by the Bankruptcy Code is “nonsensical.” ECF 101 at 9.
Plaintiffs’ arguments at the hearing in support of the likelihood of success on
the merits focused on Fannie Mae’s failure to meet the technical requirements for a
Notice of Foreclosure. However, these arguments go to Plaintiffs’ likelihood of
success on a potential future claim for wrongful foreclosure, a claim not currently
before the Court. Further, the timing of the notice is disputed and although Plaintiffs
bear the burden to prove the elements necessary for issuance of a TRO, they
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presented no actual evidence tending to demonstrate when the notice was mailed or
received.
B. Plaintiffs have failed to demonstrate irreparable injury.
Plaintiffs have not established a substantial threat of irreparable injury.
Plaintiffs’ counsel conceded at the hearing that if the foreclosure notice is deficient,
any foreclosure would be void and Plaintiffs would have an adequate remedy at law.
Further, the lack of sufficient notice does not demonstrate a threat of irreparable
injury, because any notice deficiency could be cured by Fannie Mae sending a new
foreclosure notice for future date.
Plaintiffs’ claim of irreparable harm caused by potential eviction of any
current tenants after foreclosure is not harm to Plaintiffs, but rather to those tenants.
Plaintiffs also failed to present any non-speculative argument regarding potential
eviction of current tenants.
Plaintiffs’ argument that it will be irreparably harmed because foreclosure will
cause it to “lose” a $25,000,000 insurance claim is unpersuasive. The insurance
claim is for damage to the Property. The Loan Documents provide that in the event
of foreclosure, Fannie Mae is the successor of any insurance claim. ECF 50-2 at 55.
Although real property is considered unique and its loss can represent
irreparable harm, here Plaintiff signed the Loan Documents that provide Fannie Mae
with a contractual right to foreclose. The exercise of a contractual right to foreclose
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on real property based on Plaintiff’s default on the loan does not pose an irreparable
harm to Plaintiff. If foreclosure is wrongful, Plaintiff concedes it has an adequate
remedy at law.
C. The balance of the harms and the public interest factors weigh in
favor of denying the TRO.
The threatened injury to Fannie Mae from a TRO preventing foreclosure
outweighs the injury to Plaintiffs. Plaintiffs have admitted default, which in turn
entitles Fannie Mae to foreclosure. The state of the Property has been declining, and
any continued decline in value harms Fannie Mae’s interest in its collateral. Despite
counsel’s representation at the hearing that a Piney Point minority investor has made
a last-minute offer to purchase the Property for $75,000,000, Piney Point presented
no evidence of the offer or any other firm commitment to purchase from which
Plaintiffs would be able to satisfy its debt to Fannie Mae.
Denial of the TRO precluding foreclosure does not disserve the public interest.
As noted above, Plaintiffs retain any right they may have to pursue a wrongful
foreclosure action. Further, it is in the public interest to protect the lender’s right to
recourse on a defaulted debt.
III. Conclusion and Recommendation
The Court finds based on its review of the Motion and Response,
accompanying exhibits, the applicable law, and oral arguments, that Plaintiffs have
not met their burden to demonstrate the four elements necessary to obtain a TRO.
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The Court therefore RECOMMENDS that Plaintiffs’ Motion for a Temporary
Restraining Order (ECF 98) be DENIED.
The Clerk of the Court shall send copies of the memorandum and
recommendation to the respective parties, who will then have fourteen days to file
written objections, pursuant to 28 U.S.C. § 636(b)(1)(C). Failure to file written
objections within the time period provided will bar an aggrieved party from attacking
the factual findings and legal conclusions on appeal. Douglass v. United Servs. Auto.
Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc), superseded by statute on
other grounds.
Christina A. Bryan
United States Magistrate Judge
Signed on January 06, 2026, at Houston, Texas.
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