Planet Home Lending, LLC v. Waterwall et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
P LANET H OME L ENDING, LLC, 	§
Plaintiff, 	§
§
v. 	§ 	CIVIL A CTION N O . 4:25-CV-00387
§
E RNEST WATERWALL, ET AL., 	§
Defendants. 	§
MEMORANDUM AND RECOMMENDATION
The Court ordered the appearing Parties, Plaintiff and Defendant United
States of America (“United States”), to brief the issue of subject matter jurisdiction.1
ECF 25. For the reasons discussed below, the Court RECOMENDS that Plaintiff’s
claims be DISMISSED for lack of subject matter jurisdiction.
I. 	Factual and Procedural Background.
This is a foreclosure case concerning a property which secured a loan made
to Defendant Ernest Waterwall, against whom default has been entered. ECF 1 ¶¶
4-7; ECF 13. Defendant United States has a lien interest in the property through the
Secretary of Housing and Urban Development. ECF 1-1 at 28-34; ECF 16 ¶ 14.
Plaintiff’s Complaint contains only a state-law claim for breach of contract
against Defendant Waterwall. 	ECF 1 ¶¶ 6-13. 	The Complaint brings no cause of
1 The District Judge referred this case to the undersigned Magistrate Judge pursuant to 28 U.S.C.
§ 636(b)(1)(A) and (B), the Cost and Delay Reduction Plan under the Civil Justice Reform Act,
and Federal Rule of Civil Procedure 72. ECF 22.
United States District Court
Southern District of Texas
ENTERED
April 06, 2026
Nathan Ochsner, Clerk
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action against the United States but merely names it as a title interest. 	Id. ¶ 14.
Nevertheless, Plaintiff alleges federal question jurisdiction based on a claim against
an agency or officer of the United States. Id. ¶ 1.
On January 15, 2026, the Court notified the appearing Parties of the potential
lack of subject matter jurisdiction and ordered them to brief the issue. 	ECF 25.
Plaintiff filed a brief arguing that the Court has subject matter jurisdiction based on
federal question jurisdiction 	and supplemental 	jurisdiction. 	ECF 29 	at 1-2.
Defendant United States responded that a basis for federal question jurisdiction
never existed, and therefore the Court cannot exercise supplemental jurisdiction.
ECF 30.
II. 	Legal Standards.
“If the court determines at any time that it lacks subject-matter jurisdiction,
the court must dismiss the action.” Fed. R. Civ. P. 12(h)(3). Federal courts have a
duty to examine sua sponte the basis for subject matter jurisdiction. Union Planters
Bank 	Nat. 	Assn. 	v. 	Salih, 	369 	F.3d 	457, 	460 	(5th 	Cir. 	2004).
The party asserting jurisdiction bears the burden of establishing jurisdiction is
proper. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
III. 	Analysis.
Federal 	question 	jurisdiction 	applies 	to 	actions 	“arising 	under 	the
Constitution, laws, or treaties of the United States” (28 U.S.C. § 1331) and is
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established when a “plaintiff’s well-pleaded complaint raises issues of federal law.”
City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 163 (1997) (internal
quotation marks and citation omitted). 	“Most directly, and most often, federal
jurisdiction attaches when federal law creates the cause of action asserted.” Merrill
Lynch, Pierce, Fenner & Smith Inc. v. Manning, 578 U.S. 374, 383 (2016).
Plaintiff alleges federal question jurisdiction because it “was required to name
United States to foreclose its senior lien and determine lien priority” pursuant to 28
U.S.C. § 2410(a). ECF 29 at 1. See also ECF 1 ¶ 1; 28 U.S.C. § 2410(a) (allowing
the United States to “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.”). Plaintiff argues this federal question allows the
Court 	to 	exercise 	supplemental 	jurisdiction 	over 	its 	state-law 	claim 	against
Defendant Waterwall.
Plaintiff fails to allege federal question jurisdiction because 28 U.S.C. §
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
(5th Cir. 2002). As explicitly stated in the statute, § 2410(a) operates in conjunction
with 28 U.S.C. § 1444, thereby allowing plaintiffs to name the United States as a
lienholder in state-law foreclosure actions and the United States to remove those
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actions from state court. See Hussain, 311 F.3d at 629 (explaining the “conditional
relationship” between Sections 1444 and 2410); Lewis v. Hunt, 492 F.3d 565, 571
(5th Cir. 2007) (“[I]n interpreting and applying Section 2410 we must be mindful of
its purpose and history as a lien removal statute.”). Courts in this Circuit regularly
dismiss similar cases for lack of jurisdiction. 	See Planet Home Lending, LLC v.
Rivera, No. 3:25-CV-2550-E-BN, 2025 WL 3635837, at *2 (N.D. Tex. Oct. 29,
2025) (recommending dismissal for lack of subject matter jurisdiction in a case with
similar facts filed by same Plaintiff and counsel), report and recommendation
adopted, No. 3:25-CV-2550-E-BN, 2025 WL 3634192 (N.D. Tex. Dec. 12, 2025);
Lakeview 	Loan 	Servicing 	LLC 	v. 	Lee, 	No. 	3:25-CV-00525-S-BT, 	2025 	WL
3221472, at *2 (N.D. Tex. Oct. 22, 2025) (explaining 28 U.S.C. § 2410 cannot be
the basis of jurisdiction under similar facts), report and recommendation adopted,
No. 3:25-CV-0525-S-BT, 2025 WL 3218913 (N.D. Tex. Nov. 17, 2025) (collecting
cases).
To the extent Plaintiff argues the need to adjudicate the United States’ lien
rights creates federal question jurisdiction, that argument is similarly unavailing.
ECF 29 at 2 (“While Plaintiff does not contend that § 2410 independently creates
federal question jurisdiction in every foreclosure action, the presence of the United
States and the necessity of adjudicating its lien rights formed an integral part of the
case as originally pled.”). Determination of its lien rights does not turn on federal
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law, so the presence of the United States as lienholder cannot transform “a run-of-
the-mill state law” claim into a federal question. 	Lakeview Loan Servicing LLC v.
Tennyson, No. 3:25-CV-1232-L, 2026 WL 799709, at *4–5 (N.D. Tex. Mar. 23,
2026).
Plaintiff failed to allege any other basis for subject matter jurisdiction.
Because no original subject matter jurisdiction exists, the Court cannot exercise
supplemental jurisdiction under 28 U.S.C. § 1367.
IV. 	Conclusion and Recommendation.
For the reasons stated above, the Court RECOMMENDS that Plaintiff’s
claims be DISMISSED for lack of subject matter jurisdiction.
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 April 06, 2026, at Houston, Texas.
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