Nationstar Mortgage LLC v. Abbott et al

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
Nationstar Mortgage, LLC,
Plaintiff,
v.
Phillip Abbott, and United States of
America, on behalf of the Secretary
of Veterans Affairs,
Defendants.
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Civil Action No. 4:25-cv-04399
MEMORANDUM AND RECOMMENDATION
This decision follows the Court’s show cause order raising concerns about
subject-matter jurisdiction. 	Dkt. 21. 	After considering Plaintiff Nationstar
Mortgage, LLC’s response, Dkt. 24, the pleadings, and the applicable law, it is
recommended that this suit be dismissed for want of jurisdiction.
Background
Nationstar filed this foreclosure action against Defendants Philip Abbott
and the United States of America. 	Dkt. 1 (complaint). 	According to the
complaint, Abbott executed a note payable to USAA Federal Savings Bank—
which was later assigned to Nationstar—and secured by his home. 	See id. at
3. Nationstar alleges that Abbott has defaulted on the loan. See id. at 4. The
United States is also named as a defendant because the Department of
United States District Court
Southern District of Texas
ENTERED
April 29, 2026
Nathan Ochsner, Clerk
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Veterans Affairs (the “VA”) purportedly held a lien on Abbott’s property. 	See
Dkt. 1-1 at 75-84 (Partial Claim Deed of Trust); see also Dkt. 24 at 2.
Nationstar invoked federal question jurisdiction under 28 U.S.C. § 1331 as the
sole basis for jurisdiction. Dkt. 1 at 2.
Nationstar moved for leave to file an amended complaint to cure a defect
in the pleadings and add W. Meadows Homeowners Association, Inc. as a
defendant. 	Dkt. 18. 	All defendants—including W. Meadows—have been
served. 	Dkts. 9, 22, 23. 	But the VA has filed a disclaimer of interest in the
subject property. Dkt. 13.
The Court entered an order directing Nationstar to show cause as to
whether and why subject matter is proper. 	Dkt. 21. 	Nationstar responded,
asserting 	that 	there 	is 	both 	federal 	question 	jurisdiction 	and 	diversity
jurisdiction. Dkt. 24. The 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
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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
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, Nationstar 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 	the 	complaint 	nor
Nationstar’s response to the show cause order demonstrates that this Court
has jurisdiction. This suit should be dismissed.
I. 	Section 2410 does not confer federal question jurisdiction.
Nationstar contends that there is federal question jurisdiction under
28 U.S.C. § 2410 because the suit “involves the interpretation and enforcement
of federal laws governing VA’s lien rights.” See Dkt. 1 at 2. That position does
not comport with binding authority.
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). 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).
Nationstar asserts that Hussain has been abrogated by Grable & Sons
Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 317 n.4 (2005). 	See
Dkt. 24 at 1-2. 	The Court disagrees. 	The cited footnote merely observed in
passing that Section 2410 “provide[s] a quiet title cause of action against the
Federal Government.” Grable, 545 U.S. at 317 n.4. But Grable dealt with the
defendant’s ability to remove a quiet title action under 28 U.S.C. § 1441(a). It
neither analyzed nor addressed whether Section 2410 would permit the action
to be filed originally in federal court. 	See id. at 311-12, 317 n.4 (Section 2410
was “not relevant” to its analysis); see also Lakeview Loan Servicing, LLC v.
Tennyson, 2026 WL 799709, at *3 (N.D. Tex. Mar. 23, 2026) (distinguishing
Grable; no jurisdiction over foreclosure action filed in federal court against
property owner and the United States); 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 trustee of Stanwich Mortg. Loan Tr. I v.
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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).
More fundamentally, 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 	cited 	by 	Nationstar 	cannot 	override 	Hussain’s
binding force. See Dkt. 24 at 1-3 (citing Bradford v. U.S. Dep’t of Agric., Rural
Dev., 606 F. App’x 259, 260 (5th Cir. 2015); Bartolomeo USA, LLC v. HUD,
2021 WL 5458117, at *6 (5th Cir. Nov. 22, 2021) (per curiam)). 	And the
decision in Lewis v. Hunt, 492 F.3d 565, 571 (5th Cir. 2007), changes nothing;
it treats Section 2410 as a waiver of sovereign immunity, citing Hussain. Much
like the Supreme Court’s Grable decision, the Lewis case “did not address
whether Section 2410 creates subject matter jurisdiction for cases originally
brought in federal court.” 	Lakeview Loan Servicing, LLC v. Bolton, 2025 WL
3144977, at *3 (N.D. Tex. Sept. 18, 2025), adopted by 2025 WL 3143265 (N.D.
Tex. Nov. 10, 2025). Because Hussain remains binding, Section 2410 does not
provide a basis for federal question jurisdiction. 	See, e.g., Planet Homes
Lending, LLC v. Ernest Waterwall, 2026 WL 1084006, at *2 (S.D. Tex. Apr. 6,
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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 	finding 	no 	jurisdiction), 	adopted 	by 	2025 	WL
3218913 (N.D. Tex. Nov. 17, 2025).
II. 	Nationstar has not demonstrated that the parties are diverse.
As an alternative, Nationstar now invokes diversity of citizenship as a
purported jurisdictional basis. See Dkt. 24 at 4. This is a non-starter because
Nationstar has not and cannot show that the parties are citizens of different
states. See Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254, 1259 (5th Cir.
1988) (burden of proof).
First, the VA’s inclusion as a defendant defeats diversity. “[T]he United
States is [] not a state citizen for purposes of diversity.” 	Lummis v. White,
629 F.2d 397, 402 (5th Cir. 1980), rev’d on other grounds, Cory v. White,
457 U.S. 85 (1982); see also, e.g., Hotep v. United States, 2007 WL 1321845, at
*2 (N.D. Tex. May 7, 2007) (federal agencies are not citizens “of any particular
state for purposes of diversity jurisdiction.”). 	Nationstar’s claims against a
federal agency thus destroy complete diversity. 	See, e.g., Bautista Cayman
Asset Co. v. Asociacion de Miembros de la Policia de Puerto Rico, 17 F.4th 167,
171 (1st Cir. 2021) (“[T]he presence of the United States as a party destroys
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diversity jurisdiction, because the United States is not a citizen of any State
under 28 U.S.C. § 1332.”); M&T Bank v. Arsenis, 2025 WL 1409479, at *2 (3d
Cir. May 15, 2025) (affirming remand of foreclosure action because the United
States co-defendant status destroyed diversity); Com. Union Ins. Co. v. United
States, 999 F.2d 581, 584 (D.C. Cir. 1993) (“U.S. agencies cannot be sued in
diversity.” (quoting General Ry. Signal Co. v. Corcoran, 921 F.2d 700, 703 (7th
Cir. 1991)); see also, e.g. Planet Home Lending, LLC v. Rivera, 2025 WL
2712503, 	at 	*3 	(N.D. 	Tex. 	Sept. 	22, 	2025) 	(no 	diversity 	jurisdiction 	in
foreclosure suit that included a federal agency). 	That defeats reliance on
28 U.S.C. § 1332.
Second, Nationstar failed to show that the non-governmental parties are
diverse. As a limited liability company, Nationstar’s citizenship hinges on “the
citizenship of all of its members.” 	See Harvey v. Grey Wolf Drilling Co.,
542 F.3d 1077, 1080 (5th Cir. 2008). 	And the citizenship of those members
must be traced through each organizational layer, where necessary. 	See
Mullins v. TestAmerica, Inc., 564 F.3d 386, 397 (5th Cir. 2009).
In response to the show cause order, Nationstar asserts that it “was
acquired by Rocket Mortgage LLC,” which is wholly owned by Rocket Limited
Partnership. 	Dkt. 24 at 6. 	As for Rocket Limited Partnership, however,
Nationstar labels it as a Michigan citizen merely because it is registered and
has its principal place of business there. 	Id. 	That is the wrong standard. 	As
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the Supreme Court has long held, a limited partnership’s citizenship depends
on the citizenship of every partner, both general and limited. 	See Carden v.
Arkoma Assocs., 494 U.S. 185, 195 (1990). 	And even if that glaring omission
could be rectified, it would not alter the diversity-defeating impact of the VA’s
inclusion as a defendant.
There is no basis for jurisdiction under 28 U.S.C. § 1331 or § 1332. 	The
proper course is to dismiss all claims.
Recommendation
For the foregoing reasons, it is RECOMMENDED that this suit be
DISMISSED WITHOUT PREJUDICE for lack of jurisdiction, and that
Plaintiff Nationstar Mortgage, LLC’s motion for leave to amend (Dkt. 18) be
DENIED AS MOOT.
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 April 29, 2026, at Houston, Texas.
______________________________
Yvonne Y. Ho
United States Magistrate Judge
Texas.
______________________________________
Yvoon	n	nn	n	nee Y. Ho
Uniitted States Magistrate Judge
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