Plaintiff Zachary-Wayne White, proceeding pro se, sued Fifth Third Bank, Fannie Mae, a law firm, and a title company in state court, alleging wrongful foreclosure of his home. White claimed he had satisfied the debt using a self-created 'silver surety bond' and challenged the bank's authority to foreclose. The defendants removed the case to federal court, asserting diversity jurisdiction. They argued that the law firm and title company were non-diverse parties who had been improperly joined because White could not establish valid causes of action against them. The district court agreed, dismissing the non-diverse defendants and granting summary judgment against the diverse defendants. White appealed, challenging both the improper joinder finding and the summary judgment.
The Fifth Circuit addressed three primary issues. First, regarding improper joinder, the court explained that a party is improperly joined if the plaintiff cannot establish a cause of action against them. White argued that the 'common-defense doctrine' should prevent a finding of improper joinder if the claims against diverse and non-diverse defendants fail for the same reasons. The court rejected this, noting that the district court found the law firm and title company could not be proper defendants in a quiet title suit because they never asserted a claim to the property. Furthermore, any challenge to their administration of the foreclosure was limited to a trespass-to-try action against the purchaser. Since White did not address these defendant-specific conclusions on appeal, the court found the district court properly disregarded their citizenship to preserve diversity jurisdiction. Second, the court addressed the summary judgment against Fifth Third and Fannie Mae. White argued the bank lacked authority to foreclose because it held the deed but not the note, a theory the court identified as the 'split-the-note theory.' The court affirmed that this theory is not viable under Texas law for servicers. Additionally, the record contained unrefuted evidence, including a photocopy and affidavit, establishing the note's existence. White's other arguments regarding the silver bond and void deeds were found meritless. Finally, the court rejected White's due process claim regarding discovery, noting that Texas law allows the existence of a note to be established by a photocopy and affidavit, which were provided.
The decision affirms the dismissal of the foreclosure suit, leaving the foreclosure sale in effect. It reinforces the Fifth Circuit's strict application of the improper joinder standard, ensuring that federal courts retain jurisdiction when non-diverse parties are joined without viable claims. The ruling also clarifies that the 'split-the-note' theory is not a valid defense in Texas foreclosure cases involving servicers and that photocopies with affidavits are sufficient evidence of a promissory note.