Murphy et al v. HSBC Bank USA
Filing
31
OPINION AND ORDER. The Court ORDERS that its Opinion and Order of September 12, 2013 (#19)is VACATED; Defendants motion to dismiss is DENIED; the Murphys objection that HSBC failed to abandon its 2008 acceleration of the note is sustained and their motion for summary judgment on limitations is GRANTED; and SBCs real property lien and a power of sale to enforce the real property lien is void. The stay is LIFTED and this case is DISMISSED with prejudice.(Signed by Judge Melinda Harmon) Parties notified.(rvazquez)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PATRICK O’BRIEN MURPHY a/k/a
O’BRIEN MURPHY AND BEVERLY
MURPHY,
§
§
§
§
Pro se Plaintiffs,
§
§
VS.
§
§
HSBC BANK USA AS TRUSTEE FOR THE§
WELLS FARGO ASSET SECURITIES
§
CORPORATION HOME EQUITY ASSET- §
BACKED CERTIFICATES, SERIES
§
2006-1,
§
§
Defendant.
§
CIVIL ACTION NO. H-12-3278
OPINION AND ORDER
Pending before the Court in the above referenced cause, in
part challenging Defendant HSBC Bank USA (“HSBC’s”) right to
foreclose on Plaintiffs Patrick O’Brien Murphy and Beverly Murphy’s
(“the Murphys’”) home on statute of limitations grounds, are (1)
Plaintiffs’ motion for rehearing and reconsideration (instrument
#20) of the portion of the Court’s Opinion and Order, signed on
September 12, 2013 (#19), which dismissed Plaintiffs’ claim that
the statute of limitations barred HSB’s enforcement of the Note and
related Security Instrument securing the real property of their
home;
(2)
Magistrate
Judge
Frances
Stacy’s
memorandum
and
recommendation (#28) that Plaintiffs’ motion should be denied; and
(3) Plaintiffs’ objections (#29, 30) to the Memorandum and Order.
After careful review of the record and the applicable law, for
the
reasons
stated
below the Court finds the motion for
-1-
reconsideration should be granted, the Court’s previous Opinion and
Order
should
be
vacated,
and
Plaintiffs’
motion
for
summary
judgment on limitations grounds should also be granted.
Defendant did not file an answer to the Murphys’ Original
Petition, but instead filed a motion to dismiss under Rules
12(b)(1) and (6) (#3) as its responsive pleading.
In a response
and counter motion for judgment under Rule 56 based on limitations
under Texas Civ. Prac. and Rem. Code § 16.035 (#7), Plaintiffs
requested that the Court consider the limitations bar as a matter
for summary judgment under Rule 56.
Because the Court finds that
the motion to reconsider should be granted and its earlier Opinion
and Order of dismissal vacated, the Court also addresses the motion
for summary judgment (#7), as it is intertwined with the substance
and merits of HSBC’s motion to dismiss.
Standard of Review
Although the Federal Rules of Civil Procedure do not recognize
a general motion for reconsideration,1 courts address such motions
under Rules 54(b) for interlocutory orders, and 592 and 60
final judgments.
3
for
Dos Santos v. Bell Helicopter Textron, Inc.
1
St. Paul Mercury Ins. Co. v. Fair Grounds Corp., 123 F.3d
336, 339 (5th Cir. 1997).
2
If filed within twenty-eight days of entry of judgment,
it falls under Fed. R. Civ. P. 59(e) as a motion to alter or
amend judgment.
3
If not filed within 28 days, it is a motion for relief from
judgment under Rule 60(b).
-2-
Dist., 651 F. Supp. 2d 550, 553 (N.D. Tex. 2009), citing Teal v.
Eagle Fleet, Inc., 933 F.2d 341, 347 (5th Cir. 1991);
U.S. Bank
Nat’l Assoc. v. Verizon Communications, Inc., Civ. A. No. 3:10-CV1842-G, 2012 WL 3034707, at *1 (N.D. Tex. July 25, 2012).
standard for granting a motion to reconsider is strict:
The
a party
may file such a motion “to correct manifest errors of law or fact
or to present newly discovered evidence.” Waltman v. International
Paper Co., 875 F.2d 468, 473 (5th Cir. 1989).
Motions to reconsider
are usually “not the proper vehicle for rehashing evidence or legal
theories, or raising arguments that could have been presented
earlier.” Dos Santos, 651 F. Supp. 2d at 553;
Id. at 478-79.
Because the Court’s Opinion and Order was interlocutory and
has not been certified for appeal on the grounds that “there is no
just reason for delay,” this motion falls under Rule 54(b)(“[A]ny
order or other decision, however designated, that adjudicates fewer
than all claims or rights and liabilities of fewer than all the
parties does not end the action as to any of the claims or parties
and may be revised at any time before the entry of a judgment
adjudicating all the parties’ rights and liabilities.”).
“Thus
Rule 54(b) expressly allows for revision of an interlocutory order
before
entry
of
final
judgment”
and
can
be
reopened
at
the
discretion of the district judge. Elephant Butte Irr. Dist. of New
Mexico v. U.S. Dept. of Interior, 538 F.3d 1299, 1306 (10
2008), cert. denied, 555 U.S. 1172 (2009).
th
Cir.
See also All-Pro Reps,
Inc. v. Lukenbill, 961 F.2d 216, Nos. 90-16397, 90-16430, 1992 WL
84295, at *2 (9th Cir. Apr. 22, 1992)(noting that an interlocutory
-3-
order does not have a res judicata effect), citing Luben Indus.,
Inc. v. U.S., 707 F.2d 1037, 1040 (9th Cir. 1983)(an unappealable
decision is “not sufficiently firm to give it collateral estoppel
effect.”).
Thus the standards for granting reconsideration of an
interlocutory order under Rule 54(b) “are somewhat looser than
those
under
Jefferson
Rule
Downs
59(e).”
Corp.,
Livingston Downs Racing Ass’n v.
259
F.
Supp.
2d
471,
474
(M.D.
La.
2002)(district courts have considerable discretion in determining
whether to reconsider an interlocutory order); Brown v. Wichita
County, Tex., No. 05-108, 2011 WL 1562567, at *1 (N.D. Tex. Apr.
26, 2011)(While the exact standard for deciding a Rule 54(b) is
unclear, “whether to grant such a motion rests within the
discretion of the court” and “the district court’s discretion in
this respect is broad.”).
With an interlocutory order, “the trial
court is free to reconsider and reverse its decision for any reason
it deems sufficient, even in the absence of new evidence or an
intervening change in or clarification of the substantive law.”
Lavespeare v. Niagra Machine & Tool Works, Inc., 910 F.2d 167, 185
(5th Cir. 1990), cert. denied, 510 U.S. 859 (1993), rev’d on other
grounds, Little v. Liquid Air Corp., 37 F.3d 1069 (1994)(en banc).
Nevertheless,
although
a
district
court
“‘possesses
the
inherent procedural power to reconsider, rescind, or modify an
interlocutory order for cause seen by it to be sufficient,’” the
court must exercise its discretion by balancing “stability and
reaching the right decision.”
Melancon v. Texaco, Inc., 659 F.2d
551, 553 (5th Cir. 1981); 18B Charles A. Wright and Arthur R.
-4-
Miller, Federal Practice & Procedure § 4478.1 (2d ed. 2001).
In
light of the stay imposed on this case until the appeal of the
Murphys’ first state court suit is resolved, the Court in its
discretion finds that rehearing and reconsideration at this stage,
since the briefing is complete, would not result in any further
additional expense or delay to the parties because the case has not
progressed so as to make a return to and reconsideration of the
issue costly or difficult to untangle; instead reconsideration
would permit review of more developed facts than were previously
before the Court and aid in insuring a correct and just result.
Moreover the Court finds errors of law in the Magistrate Judge’s
memorandum and recommendation that should be addressed.
Procedural History
After refinancing a loan on their property at 503 Flaghoist
Lane, Houston, Texas 77079 in 2006,4 in early 2008 the Murphys
deliberately defaulted5 on their mortgage in an attempt to force
Wells Fargo to negotiate another refinancing of their home, based
on Wells Fargo’s alleged promise that if their credit improved and
they made their payments, they could refinance after two years at
a lower interest rate.
Wells Fargo, as mortgage servicer for HSBC,
4
Copies of the Note and Texas Home Equity Security
Instrument executed by the Murphys are attached to the Original
Petition (Instrument #1-3, Ex. B.2).
5
Original Petition at ¶ 10 (#1, Ex. B.2 at ¶10: “Wells
Fargo counterclaimed, but sought in their counterclaim only a
declaratory judgment that the Murphys were in default (hardly
necessary as the Murphys admitted they stopped making payments in
their petition) and attorneys fees. [emphasis in the original].”
-5-
then accelerated the loan, sending a notice of intent to accelerate
and, and on June 12, 2008, Plaintiffs received the notice of
acceleration informing them that the principal and interest on the
loan were immediately due and payable (#1, Exs. C and D).
On June 19, 2008 Wells Fargo assigned the Note and Deed of
Trust on the loan to HSBC, which subsequently served the Murphys
with an expedited, non-judicial foreclosure action.
and
HSBC
filed
an
application
for
Wells Fargo
expedited non-judicial
foreclosure in the 295th Judicial District Court of Harris County,
Texas.
The Murphys then sued Wells Fargo and HSBC in the 55
th
Judicial Court of Harris County, Texas (the “First Lawsuit”) for
fraud, breach of contract, and violation of the Texas Deceptive
Trade Practices-Consumer Protection Act.
As required by Texas Rule
of Civil Procedure 736.10,6 on November 24, 2008 the 295th Judicial
District Court abated and dismissed Wells Fargo and HSBC’s suit
seeking expedited non-judicial foreclosure.
Subsequently in their
state court suit, after the Murphys challenged the standing of
Wells Fargo or HSBC to foreclose on their house, on March 29, 2011
the trial court granted summary judgment in favor of Wells Fargo
and HSBC, dismissed the Murphys’ claims, and awarded Defendants
6
In effect at the time, Rule 736.10 (West 2010) provided,
A proceeding under Rule 736 is automatically abated if,
before the signing of the order, notice is filed with
the clerk of the court in which the application is
pending that respondent has filed a petition contesting
the right to foreclose in a district court in the
county where the application is pending. A proceeding
that has been abated shall be dismissed.
-6-
fees and costs against the Murphys, personally. 7
On appeal, on
February 12, 2013, the 14th Court of Appeals affirmed the summary
judgment, but reversed the award of fees and costs against the
Murphys personally, stating that the banks could only recover fees
and costs against the property.
Murphy v. Wells Fargo Bank, N.A.,
No. 14-11-00560-CV, 2013 WL 510129 (Tex. App.--Houston [14th Dist.]
Feb. 12, 2012), petition for review filed (Apr. 29, 2013). 8
As
noted in the citation, an appeal was filed.
After the trial court’s ruling in the First Lawsuit, HSBC sent
Plaintiffs a new notice of intent to accelerate on December 30,
2011,9 and a notice of acceleration on June 20, 2012.10
7
On August
Copy of final summary judgment at #10-6 Ex. F.
8
With regard to HSBC’s motion to dismiss Murphys’ claims
contesting HSBC’s chain of title as barred by res judicata, in
its Opinion and Order (#19) the Court denied the motion to
dismiss as to them and stayed that part of the case until the
appeal in state court of the First Lawsuit is final.
9
Copy included in #10-7 Ex. G.
10
This Court notes that HSBC sent its second notice of
intent to accelerate on December 30, 2011, still within four
years of the initial acceleration of the Note and the accrual of
HSBC’s claim on June 12, 2008, but its notice of acceleration on
June 20, 2012, was outside the limitations period. Moreover HSBC
filed its second application for expedited non-judicial
foreclosure on August 16, 2012. See Slay v. Nationstar Mortg.,
LLC, No. 2-09-052-CV, 2010 WL 670095, at *3 (Tex. App.-–Fort
Worth Feb. 25, 2010, pet. denied)(“The plain language of section
16.035(a) does not require that the actual foreclosure occur
within the four-year limitation period, but rather, requires only
that the party seeking foreclosure ‘bring suit . . . not later
than four years after the day the cause of action accrues.’”).
Therefore unless the first acceleration was effectively
abandoned, continued, or waived, and therefore a new, independent
acceleration invoked in June 2012, HSBC’s second suit, i.e., the
-7-
16, 2012, HSBC filed a new application for non-judicial foreclosure
in the 270th Judicial District.11
In turn, on September 26, 2012,
the Murphys filed the instant suit in the 151st District Court of
Harris County, Texas against HSBC, claiming an invalid chain of
title and unenforceable Note and Deed of Trust on limitations
grounds and seeking a declaratory judgment.
The suit was
transferred to the 270th Judicial District, where HSBC had filed its
second Application for Court Order Allowing Foreclosure, and on
November 5, 2012 Defendants removed the case to this Court on
diversity jurisdiction.
HSBC then moved to dismiss on the grounds
that the chain of title claim was barred by
res judicata, or
alternatively, for failure to state a claim.12
It also moved to
dismiss the Murphys’ limitations claims under Federal Rule of Civil
Procedure 12(b)(6).
At issue now in Plaintiffs’ objections to the Magistrate
Judge’s recommendation is whether, in compliance with Texas law at
the time, Tex. R. Civ. P. 736.10, HSBC could (and did) unilaterally
and without a written agreement abandon the 2008 acceleration of
the Note by the state court judge’s November 24, 2008 order of
abatement and dismissal of HSBC’s initial foreclosure proceeding
instant action, was outside the four-year limitations period and
is time-barred.
11
#10-7 Ex. G.
12
With regard to the res judicata claim, based on the state
court ruling in the First Lawsuit, in its previous Opinion and
Order (#19) the Court stayed the part of this lawsuit raising
that defense until the appeal of the first Lawsuit is final.
-8-
against the Murphys, which was signed as “approved as to form and
substance” by the Murphys’ attorney.
Relevant Law
Under Texas Civil Practice & Remedies Code § 16.035(b) and
(d), “a sale of real property under a power of sale in a mortgage
or deed of trust that creates a real property lien must be made not
later than four years after the day the cause of action accrues,”
and “on the expiration of the four-year limitations period, the
real property lien and a power of sale to enforce the real property
lien
become
void.”
Ordinarily, “[i]f a series of notes or
obligations or a note or obligation payable in installments is
secured by real property, the four-year limitations period does not
begin to run until the maturity date of the last note, obligation,
or installment.
Id., § 16.035(e).
The Maturity Date on Murphys’
Note and on the Security Instrument is February 1, 2036.
Exs. A and B.
#1-3,
“When this four-year period expires, the real-
property lien and the power of sale to enforce the lien become
void.”
Tex. Civ. Prac. & Rem. Code § 16.035(d); Holy Cross Church
of God in Christ, 44 S.W. 3d 562, 567 (Tex. 2001).13
Nevertheless when the holder of a note secured by a real
property
lien
accelerates
payment
13
according
to
an
optional
Under Texas Civ. Prac. & Rem. Code § 16.035(e), “If a
series of notes or obligations or a note or obligation payable in
installments is secured by a real property lien, the four-year
limitations period does not begin to run until the maturity date
of the last note, obligation or installment.”
-9-
acceleration clause in the note,14 an action accrues as of the date
the note is accelerated.
Holy Cross, 44 S.W. at 566; Burney v.
Citigroup Global Markets Realty Corp., 244 S.W. 3d 900, 903 (Tex.
App.--Dallas 2008, no pet.).
question
of
law
for
the
When a cause of action accrues is a
court,
while
whether
a
holder
has
accelerated a note is a question of fact to which the parties may
stipulate.
Holy Cross, 44 S.W. 3d at 567-68.
Here the documents
attached to the petition, of which the Court took judicial notice
and which the parties do not dispute, reflect that the date of
accrual (the date of acceleration) was June 12, 2008.
“The plain
language of section 16.035(a) does not require that the actual
foreclosure occur within the four-year limitation period, but
rather, requires only that the party seeking foreclosure ‘bring
suit . . . not later than four years after the day the cause of
action accrues.’” Slay v. Nationstar Mortg., L.L.C., No. 2-09-052CV, 2010 WL 670095, at *3 (Tex. App.--Fort Worth Feb. 25, 2010 pet.
denied).
Thus HSBC had four years from June 12, 2008 to file suit
before its lien and power to enforce the Note became void.
The
instant action was not filed until August 16, 2012, more than four
years after the Note was due and payable.
As this Court noted, however, in its Opinion and Order,
14
Acceleration requires both a notice of intent to
accelerate and a notice of acceleration. Burney, 244 S.W. 3d at
903, citing Holy Cross, 44 S.W. 3d at 566. In Holy Cross, 44
S.W. 3d at 569, the Texas Supreme Court rejected the view that
beyond such notice an affirmative act toward enforcing the
acceleration, such as posting notice of the foreclosure sale, is
required to trigger acceleration of the note.
-10-
“[A]cceleration can be abandoned by agreement or other action of
the parties.”
Khan v. GBAK Properties, Inc., 371 S.W. 3d 347, 353
(Tex. App.--Houston [1st Dist.] 2012), citing Holy Cross , 44 S.W.
3d at 567.
The Fourteenth Court of Appeals observed, “It has been
the law of Texas at least since 1901 that the parties can abandon
acceleration and restore the contract to its original terms by the
parties’ agreement or actions.”
Khan, 371 S.W. 3d at 356, citing
San Antonio Real Estate, Bldg. & Loan Ass’n v. Stewart , 94 Tex.
441, 61 S.W. 386, 388 (Tex. 1901).
to be made in writing.
Such an agreement does not need
Santibez, 2012 WL 3639814 at *3 (“parties
can abandon acceleration by their actions alone”); Khan, 371 S.W.
3d
at 356 (Abandonment requires joint action of the parties; “[I]f
an agreement abandoning acceleration had to be in writing, then the
parties would not be able to do it by their actions alone, as [San
Antonio Real-Estate Building & Loan Assoc. v. Stewart, 94 Tex. 441,
61 S.W. 386, 388-89 (Tex. 1901)] holds.”
In addition, “[e]ven when a note holder has accelerated a note
upon default, the holder can abandon acceleration if the holder
continues
to
accept
payments
without
available to it upon declared maturity.”
exacting
any
remedies
Holy Cross, 44 S.W. 3d at
566-67.
Moreover, the note holder cannot unilaterally abandon its
acceleration
objects.
by
San
dismissing
Antonio
its
claims
Real-Estate
Stewart, 61 S.W. at 388-89 (Tex. 1901)
where
Building
the
&
other
Loan
party
Assoc.
v.
(“It is not in the power of
the creditor by his acts alone to change the rights of the parties
-11-
resulting from the maturity of the debt,” and “neither party by his
separate
other.”).
action
or
nonaction
[may]
impair
the
rights
of
the
In Denbina v. City Of Hurst, 516 S.W. 2d 460, 463 (Tex.
Civ. App.--Tyler 1974, no writ), the court opined that “the action
of the obligee in exercising his option to accelerate payment and
declare all of the notes of a series due, absent some object of the
maker, does not render irrevocable his right to waive the exercise
of the option.”
It held that where a debtor makes no objection, a
creditor can abandon or rescind its acceleration by voluntarily
dismissing its claims against the debtor.
Id.
A note holder may suspend the four-year limitations period
after it has started to run and extend the maturity date of the
note by filing their agreement to do so in writing in the county
clerk’s office where the real property is located.
16.03615; id.
15
Id. at §
In Santibanez v. Saxon Mortg. Inc., No. 11-10-00227-
Section 16.036 states,
Extension of Real Property Lien
(a) The party or parties primarily liable for a debt or
obligation secured by a real property lien, as the term
is defined in Section 16.035, may suspend the running
of the four-year limitations period for real property
liens through a written extension agreement as provided
by this section.
(b) The limitations period is suspended and the lien
remains in effect for four years after the extended
maturity date of the debt or obligation if the
extension agreement is:
(1) signed and acknowledge as provided by law
for a deed conveying real property; and
-12-
CV, 2012 WL 3639814, at *3 (Tex. App.--Eastland Aug. 23, 2012, no
pet.),
the
appellate
court
rejected
the
argument
that
an
abandonment agreement must comply with § 16.036.
“Abandonment of the acceleration has the effect of restoring
the contract to its original condition, including restoring the
note’s original maturity date.”
Khan, 371 S.W. 3d at 353, citing
Holy Cross, 44 S.W. 3d at 567; in accord Clawson v. GMAC Mortgage,
LLC f/k/a GMAC Mortgage Corp., No. 3:12-CV-00212, 2013 WL 1948128
(S.D. Tex. May 9, 2013); Santibanez v. Saxon Mortg. Inc., No. 1110-00227-CV, 2012 WL 3639814, at *2 (Tex. App.--Eastland Aug. 23,
2012, no pet.).
Court’s September 12, 2013 Opinion and Order (#19)
In its Opinion and Order, the Court found that in their
Original Petition the Murphys had “stated a claim as to the
validity of the lien under Section 16.035 of the Texas Civil
Practice and Remedies Code” because they alleged that the Note was
accelerated by HSBC on June 12, 2008, but that HSBC failed to file
(2) filed of record in the county clerk’s
office of the county where the real property
is located.
(c) The parties may continue to extend the lien by
entering, acknowledging, and recording additional
extension agreements.
(d) The maturity date stated in the original instrument
or in the date of the recorded renewal and extension is
conclusive evidence of the maturity date of the debt or
obligation.
(e) The limitations period under this section is not
affected by Section 3.118, Business & Commerce Code.
-13-
suit
until
August
acceleration.
16,
2012,
more
than
four
years
after
the
This Court nevertheless further concluded, based on
the Murphys’ allegations and the public documents provided by HSBC
that under the facts here “a limitations claim cannot be maintained
under Section 16.035 as a matter of law.”
#19 at pp. 7-8.
It
determined that HSBC’s dismissal of its state court application for
expedited, non-judicial foreclosure in the 295th Judicial Court of
Harris County, Texas in favor the Murphys’ state court lawsuit
against
HSBC
and
Wells
Fargo
challenging
HSBC’s
standing
to
foreclose (the First Lawsuit), constituted an abandonment of the
acceleration of the Note.
Id. at p. 8.
Specifically it found that
under Texas Rule of Civil Procedure 736, section 10,
16
and an
agreement of the parties, HSBC’s application was “automatically
abated and. . . dismissed” after the Murphys filed their action in
the 55th Judicial District Court of Harris County, pursuant to Rule
736.10 then in effect.
The Court found the dismissal was agreed
based on the fact that both parties signed the agreement,17 with the
16
The 2008 Foreclosure Application and Dismissal occurred
when former Texas Rule of Civil Procedure 736.10 was in effect.
The rule provided, “A proceeding under Rule 736 is automatically
abated if, before the signing of the order, notice is filed with
the clerk of the court in which the application is pending that
respondent has filed a petition contesting the right to foreclose
in a district court in the county where the application is
pending. A proceeding that has been abated shall be dismissed.”
17
Copies of the order of the 295th Judicial District Court
dismissing HSBC’s application for expedited non-judicial
foreclosure on November 24, 2008 are found at #3-2, #10-5 Ex. E,
and #20 Ex. B. The order states that because the Murphys filed
suit in the 55th Judicial District Court of Harris County
contesting HSBC’s right to foreclosure, HSBC’s application for
-14-
Murphys’ counsel expressly approving the order “as to form and
substance,” that the dismissal was unopposed by HSBC, and that HSBC
did not appeal the dismissal.
By means of HSBC’s conduct and the
dismissal order by the 295th District Court, this Court opined that
the June 12, 2008 acceleration was abandoned and the
contract was restored to its original condition. Having
been restored to its original condition, the current
cause of action accrued on June 20, 3012 when HSBC sent
the second notice of acceleration to the Murphys.
Therefore, due to the abandonment of the original
acceleration, the Murphys’ limitations claim cannot be
maintained under Section 16.035 as a matter of law and
must be dismissed pursuant to Fed. R. Civ. P. 12(b)(6).
#19. p 9.
The Murphys’ Motion for Rehearing and Reconsideration (#20)
Plaintiffs moved for rehearing and reconsideration, arguing
that
the
Court
considered
“public
extraneous
matters”
and
erroneously interpreted the governing statutes and the holdings of
the Texas Supreme Court, impliedly ruling that the unilateral acts
of the note holder are sufficient to constitute abandonment.
The
parties did not formally reinstate the loan under Tex. Civ. Prac.
& Rem. Code § 16.036.
Defendants contend that abandonment of
acceleration requires an actual agreement of both the note holder
and the debtor or a course of conduct by both parties to evidence
a mutual intent to restore the note to its original terms.
Khan,
371 S.W. 3d 347.
expedited non-judicial foreclosure had to be automatically abated
under § 736.10 and dismissed. Moreover, on the second page of
the order Michael Stewart, as attorney for the Murphys, signed as
“APPROVED AS TO FORM AND SUBSTANCE,” while Jeffrey Hardaway, as
attorney for HSBC, signed as “APPROVED AS TO FORM ONLY.”
-15-
In
essence
the
Murphys
contend
that
the
Court
erred
by
concluding that HSBC’s acceleration of the Note was abandoned by
the parties because the public documents submitted by HSBC do not
show an agreement of the parties to abandon the acceleration nor a
mutual intent that the Note would be restored to its original
terms.
They argue that the order of dismissal of the first
expedited
foreclosure
action
was not an agreed order.
The
dismissal order only states that the action is dismissed.
Counsel
for HSBC approved the dismissal order as to form only. 18
Because
the order does not provide for any payments to be made or accepted
nor require the note holder to waive any right to proceed with
remedies available to HSBC after acceleration, the Murphys contend
that
the
order
fails
to
satisfy
the
level
of
necessary to evidence abandonment of acceleration.
mutual
action
Moreover under
Texas Rule of Civil Procedure 736(8)(effective until January 1,
2012), the order of dismissal is not appealable, so the Court’s
reliance on HSBC’s failure to appeal is misplaced.
Although Rule
736 requires that the suit filed by the Murphys contesting the
foreclosure must result in automatic dismissal without prejudice of
HSBC’s first expedited non-judicial foreclosure suit, HSBC also
18
In their response (#7) to HSBC’s motion to dismiss, the
Murphys argue that if HSBC “can ‘re-accelerate’ and change the
accrual date unilaterally,” then “[w]hat could stop it from
accelerating and then re-accelerating every 3 years and 364 days,
extending limitations forever and destroying the meaning of
Sections 16.035 and 16.036 of the Texas Practice and Remedies
Code? Nonsensical is a rather kind way to describe such a
ludicrous argument.” #7 at p. 6.
-16-
failed to counterclaim for judicial foreclosure in the Murphys’
state court action, or even seek an order under Rule 736(8).
Instead HSBC chose only to delay instituting foreclosure past the
expiration date of the statute of limitations.
Plaintiffs insist
they took no action to obstruct HSBC from enforcing its rights as
provided in Texas Rules of Civil Procedure 73519 and 736(9)20 and in
the
Note
and
Security
Instrument,
which
included
filing
a
counterclaim for foreclosure. A dismissal without prejudice has no
effect on the accrual date without formal reinstatement under
19
Section 735 (effective until January 1, 2012, provided,
A party seeking to foreclose a lien created under Tex.
Const. art XVI, § 50(a)(6), for home equity loan, or
Tex. Const. art. XVI, § 50(a)(7), for a reverse
mortgage, that is to be foreclosed on grounds other
than Tex. Const. art. XVI, §§ 50(k)(6)(A) or (B), may
file: (1) a suit seeking judicial foreclosure; (2) a
suit or counterclaim seeking a final judgment which
includes an order allowing foreclosure under the
security instrument and Texas Property Code § 51.002,
or (3) an application under Rule 736 for an order
allowing foreclosure.
20
Section 736.9 (effective until January 1, 2012, provided,
Nonpreclusive Effect of Order. No order or
determination of fact or law under Rule 736 shall be
res judicata or constitute collateral estoppel or
estoppel by judgment in any proceeding or suit. The
granting of an application under these rules shall be
without prejudice to the right of the respondent to
seek relief at law or in equity in any court of
competent jurisdiction. The denial of an application
under these rules shall be without prejudice to the
right of the applicant to re-file the application or
seek other relief at law or in equity in any court of
competent jurisdiction.
-17-
16.036 or joint action of the parties.
HSBC’s Response (#21)
HSBC objects to the Murphys’ argument that Texas law does not
require either a formal, written agreement nor joint action to
abandon an acceleration.
The Court has already indicated that the law does not require
a formal written agreement by the parties to abandon acceleration.
Santibez, 2012 WL 3639814 at *3 (“parties can abandon acceleration
by their actions alone”); Khan, 371 S.W. 3d
at 356 (“[I]f an
agreement abandoning acceleration had to be in writing, then the
parties would not be able to do it by their actions alone, as [San
Antonio Real-Estate Building & Loan Assoc. v. Stewart, 94 Tex. 441,
61 S.W. 386, 388-89 (Tex. 1901)] holds.”.
HSBC also contends that Texas law does not require joint
action to abandon an acceleration and that a borrower can strip a
lender of its rights by unilaterally acting or refusing to act.
Citing Clawson, 2012 WL 1948128, at *4 (holding that a note holder
may “abandon[] acceleration without express agreement from the
borrower”)(citing Holy Cross, 44 S.W. 3d at 566-67)), HSBC insists
that there is no case requiring joint action by the parties.
at *4.
Id.
If such were the rule, a debtor could prevent HSBC from
abandoning acceleration by refusing to make payments on the note
and could strip lenders of their rights by unilaterally acting or
refusing to act.
Nor is HSBC required to show that the Murphys
prevented HSBC from filing for foreclosure by filing a counterclaim
in their state court suit in 2008.
-18-
Magistrate Judge’s Memorandum and Recommendation (#28)
Recommending that this Court deny Plaintiffs’ motion for
rehearing and reconsideration, the Magistrate Judge concurred with
the Court’s finding that the agreed dismissal of HSBC’s state court
application for expedited non-judicial foreclosure in favor of the
Murphys’ subsequent state court suit against HSBC and Wells Fargo,
constituted an abandonment of acceleration of the Note.
The
Magistrate Judge concluded that there was no error in this Court’s
ruling.
In light of the Murphys’ subsequently filed suit in the
55th District Court of Harris County, Texas, contesting HSBC and
Wells Fargo’s right to foreclose, the 295th District Court, as
required by Texas Rule of Civil Procedure 736.10, “automatically
abated” and dismissed HSBC’s first application for expedited nonjudicial foreclosure in an order that was signed by the Murphys’
counsel as approved as to form and substance and by HSBC’s counsel
as to form only.
Thus the parties agreed to the dismissal, which
accordingly abandoned the acceleration of the note.
Nor, the Magistrate Judge concluded, was it error for the
Court to consider the public documents submitted in connection with
the Original Petition and the Murphys’ Rule 12(b)(6) motion to
dismiss because the Court properly took judicial notice of matters
of public record.
Norris v. Hearst Trust, 500 F.3d 454, 461 (5th
Cir. 2007)(“It is clearly proper in deciding a 12(b)(6) motion to
take judicial notice of matters of public record.”); Lone Star Fund
V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir.
2010)(“The
court’s
review
is
limited
-19-
to
the
complaint,
any
documents attached to the complaint, and any documents attached to
the motion to dismiss that are central to the claim and referenced
by the complaint.”).21
21
The Court further notes that Federal Rule of Evidence
201(b) allows the Court to take judicial notice only of an
adjudicative fact “not subject to reasonable dispute in that it
is either (1) generally known within the territorial jurisdiction
of the trial court or (2) capable of accurate and ready
determination by resort to sources whose accuracy cannot
reasonably be questioned.” Furthermore, Rule 201(g) states, “In
a civil action or proceeding, the court shall instruct the jury
to accept as conclusive any fact judicially noticed.” “A fact
that has been judicially noticed is not subject to dispute by the
opposing party.” Taylor v. Charter Med. Corp., 162 F.3d 827, 831
(5th Cir. 1988)(“Since the effect of taking judicial notice under
201 is to preclude a party from introducing contrary evidence and
in effect, directing a verdict against him as to the fact
noticed, the fact must be one that only an unreasonable person
would insist on disputing.”).
In Taylor Charter Medical Corp., 162 F.3d 827, 829-30 (5th
Cir. 1998)(citations omitted), the Fifth Circuit joined the
Second and Eleventh Circuit Courts of Appeals in ruling that a
court may take judicial notice of a “document filed in another
court . . . to establish the fact of such litigation and related
filings,’ but not of the factual findings of another court
because those do not constitute facts “not subject to reasonable
dispute within the meaning of Rule 201 and because to do so
merely because a fact had been found to be true in some other
action would make the doctrine of collateral estoppel
superfluous. A court may take judicial notice of an order of
another court only for the limited purpose of recognizing the
judicial act that the order represents. Id. at 831; Colonial
Leasing Co., 762 F.2d at 759. See also Kay v. Lone Star Fund v,
(U.S.), L.P., 453 B.R. 645, 664-65 (N.D. Tex. 2011)(“When a court
takes judicial notice of public documents or documents from
another court, it may only take notice of the undisputed facts
therein, which do not include the ‘facts’ asserted in various
affidavits and depositions.”).
It is proper to take judicial notice of the record in an
earlier proceeding if the case involved the same parties now
before the court. In re James, 300 B.R. 890, 896 (Bkrtcy. W.D.
Tex. 2003), citing Shuttlesworth v. City of Birmingham, Ala., 394
U.S. 147, 157 (1969).
-20-
In addition, to the Murphys’ argument that acceleration was
not abandoned because they made no payments on the Note after the
2008 acceleration and there was no agreement that the acceleration
was abandoned, the Magistrate Judge determined that the Murphys’
argument lacked merit because Texas law does not prevent HSBC from
unilaterally abandoning the 2008 acceleration.
She opined that no
Texas authority supports the Murphys’ contention that they had to
be a party to any abandonment or that any mutual intent was needed
for the abandonment.
She construed
abandonment can occur when a note
Holy Cross’ holding that
holder unilaterally decides to
accept payments from a debtor “without exacting any remedies” as
indicating the opposite.
Moreover she cites
Clawson v. GMAC
Mortgage, LLC, No. 3:12-cv-00212, 2013 WL 1948128, at *4 (S.D. Tex.
May 9, 2013), for its holding that Texas law “does not preclude a
note holder from abandoning acceleration without express agreement
from the borrower.”22
22
This Court finds that Clawson is easily distinguished
from the situation here and does not apply because in Clawson the
note holder, after providing a notice of acceleration, recorded a
notice publicly rescinding the acceleration and thereby restoring
the note and deed of trust to their original terms and
conditions. 2013 WL 1948128, at *1. This Court observes that in
Clawson, after Clawson defaulted on her mortgage loan, GMAC
properly accelerated the note on October 28, 2008. Nevertheless,
on January 16, 2009, stating that Clawson had requested an
opportunity to cure, GMAC recorded a notice rescinding the
acceleration and thus the note and deed of trust were restored to
their original terms and conditions. Clawson then filed a
declaration stating that she had never made that request. After
the rescission, Plaintiffs Clawson and Riddle filed suit against
GMAC and others, but it was dismissed with prejudice after the
court granted summary judgment in favor of GMAC. On August 25,
2011 GMAC sent Clawson another notice of default and demanded
that she cure within 30 days. On May 30, 2012 it sent a new
-21-
Plaintiffs’ Objections (#29 and 30)
The Murphys identify as the Magistrate Judge’s “most glaring
factual error” her finding that the state court’s order dismissing
HSBC’s 736 application for expedited foreclosure was an agreed
order that constituted an abandonment of HSBC’s acceleration of the
Note and her erroneous reliance for that conclusion on the Murphys’
counsel’s signature approving the order as to form and substance.
They argue that courts have held that the notation, “Approved as to
notice of acceleration stating that Clawson owed $1,004,480.58,
and notice of substitute trustee’s sale, named a substitute
trustee, and set a foreclosure sale for July 3, 2012. The day
before that sale was to take place, Plaintiffs filed a lawsuit
seeking declaratory and injunctive relief and damages on a usury
claim, which was removed to federal court. Judge Costa found
that “GMAC abandoned its attempted acceleration [in 2008], and
accordingly reset the statute of limitations, when it recorded
the notice of rescission in January 2009.” 2013 WL 1948128, at
*3. Because GMAC thereby restored the note and deed of trust to
their original trust, its cause of action for the next default
did not accrue until it exercised its option to accelerate in May
2012, and the foreclosure sale date of July 3, 2012 was within
the four-year limitations period. Id. at *4, Noting that the
Texas Supreme Court in San Antonio Real Estate Building & Loan
Assoc. v. Stewart, 94 Tex. 441, 61 S.W. 3d 386, 388-89 (Tex.
1901) held that “It is not in the power of the creditor by his
acts alone to change the rights of the parties resulting from the
maturity of the debt” and that “neither party by his separate
action or nonaction [may] impair the rights of the others,”
Judge Costa distinguished Clawson: “Stewart was premised on the
situation is which the failure to pay an installment ipso facto
gives rise to the cause of action on the whole debt; the opinion
explicitly distinguishes situations, like the present, in which
the contract is regarded as giving to the creditor the right of
election.” Id., citing Stewart at 388.
In the case before this Court, Wells Fargo and HSBC could
elect whether to give notice of intent to accelerate and notice
of acceleration of the debt.
While Clawson does not require a written or express
agreement, it does not hold that unilateral rather than joint
action by a party is sufficient for abandonment outside of
available statutory remedies such as Texas Rules of Civil
Procedure 735, 736.
-22-
Form and Substance,” is insufficient, by itself, to make a judgment
a consent judgment that is not subject to appeal.
Oryx Energy
Company v. Union Nat’l Bank of Texas, 895 S.W. 2d 409, 417 (Tex.
App.--San Antonio, 1995, pet. denied); First American Title Ins.
Co. v. Adams, 829 S.W. 2d 356, 364 (Tex. App.--Corpus Christi 1992,
writ denied)(“Courts should not decide cases based on the inclusion
or omission of ‘magic words.’
Instead decisions should be based
upon the facts as recited in the record as a whole.”).
In response to the Murphys’ argument, the Court reiterates
that motions to reconsider are not the proper vehicle for raising
new arguments that could have been raised earlier.
Templet, 367
F.3d at 479; U.S. Bank Nat. Ass’n v. Verizon Communications, Inc.,
No. 3:10-CV-1842-G, 2012 WL 3034707, at *2 (N.D. Tex. July 25,
2012).
they
The Murphys did not argue in their Original Petition that
opposed
the
mandatory
dismissal
of
Defendants’
first
foreclosure suit or that their counsel’s signature approving the
final judgment as to form and substance did not mean that counsel
consented to it, nor did Plaintiffs raise such arguments in their
response to the motion to dismiss/purported motion for summary
judgment
(#7)
Defendants’
or
in
their
response(#10)
to
response
#7.
in
opposition
Nevertheless,
(#15)
to
because
in
balancing the need for certainty, finality and protection of the
parties from additional delay and cost against the need for a just
and correct decision, the Court finds that reconsidering the issues
-23-
under the circumstances here would not result in additional cost
and delay to the parties and additional development of the facts
would serve the ends of a just and correct decision.
Regarding Plaintiffs’ contentions about the phrases “approval
as to form and substance” and/or “approval as to form” this Court
notes that there is a split among the Texas courts of appeals on
this question and that some courts support the Court’s earlier
decision.23
See, e.g., In re D.C., 180 S.W. 3d 647, 649 (Tex. App.-
Waco Oct. 12. 2005).
Among those holding that approving a judgment
as to form and substance creates a consent judgment that cannot be
appealed are DeLee v. Allied Finance Co. of Dallas, 408 S.W. 2d 245
(Tex. Civ. App.--Dallas 1966); Cisneros v. Cisneros, 787 S.W. 2d
550,
552
(Tex.
App.--El
Paso
1990,
no
writ)(“Approval
as
to
substance of a judgment is tantamount to an agreement by the
signatory
that
requirements.
the
judgment
meets
all
of
the
essential
By Appellant’s approval of the substance of the
judgment we hold that Appellant has waived any error in the
judgment . . . .“); Bexar County Criminal Dist. Attorney’s Office
23
A signed approval of a judgment can make the judgment a
consent judgment. Holler v. State Farm Mutual Auto Ins. Co., 551
S.W. 2d 46, 48 (Tex. 1977). A party may not appeal an agreed
judgment unless he alleges and shows fraud or misrepresentation
because the effect of a consent judgment is to waive all errors
except lack of jurisdiction. DeLee v. Allied Finance Co., 408
S.W. 2d 245, 247 (Tex. App.--Dallas 1966, no writ); Dunman v.
Hartwell, 9 Tex. 495, 495 (Tex. 1853). Approval of a judgment as
to form only, which signifies that the person agrees that the
written judgment accurately reflects the court’s ruling, does
not, however, waive the right to appeal the judgment. Sigma
Systems Corp. v. Electronic Data Systems Corp., 467 S.W. 2d 675,
677 (Tex. Civ. App.--Tyler 1971, no writ).
-24-
v. Mayo, 773 S.W. 2d 642, 644 (Tex. App.--San Antonio 1989, no
writ)(“Consent must be explicitly and unmistakably given.
The
notation ‘Approved,’ standing alone, is too indefinite to justify
declaring as a matter of law that a judgment is a consent judgment.
We hold that when an attorney’s signature indicates ‘Approved,’ he
has simply approved the judgment as to form only, unless the
language in the judgment indicates that the substance of the
judgment was also agreed.
The better practice is to remove all
uncertainly by stating ‘Approved as to Form Only’ or ‘Approved and
Agreed’ or ‘Approved as to Form and Substance.’
did
Because the State
not agree to the order, it was entitled to bring this
appeal.”); Allied First Nat’l Bank of Mesquite v. Jones, 766 S.W.
2d 800, 801 (Tex. App.--Dallas 1988, no writ); Claxton v. (Upper)
Lake Fork Water Control and Imp. Dist. No. 1, 220 S.W. 3d 537, 544
(Tex. App.-–Texarkana 2006); Office of Attorney General of Texas v.
Wilson, 24 S.W. 3d 902, 906 (Tex. App.--Dallas 2000).
See also
Seeberger v. BNSF Ry. Co., No. 01-12-00583, 2013 WL 5434141, at *5
(Tex. App.--Houston [1st Dist.] Sept. 26, 2013)(“Seeberger noted his
objection on the proposed judgment by limiting approval to form
only, which “does not waive any error in the proceedings or
incident to the judgment itself.”), quoting Cisneros, 787 S.W. 2d
at 552.
Other courts have held that neither “approved as to form” or
“approved as to form and substance,” standing alone, transforms the
judgment into a consent judgment.
See, e.g., Chang v, Nguyen, 81
S.W. 3d 314, 316, 319 n. 1 (Tex. App.--Houston [14 th Dist.] 2001,
-25-
no pet.).
Nevertheless, the Court’s research has led it to conclude, and
thus to agree with the Murphys, that the majority of courts have
held that a counsel’s agreement as to form and content of a
judgment,
standing
alone,
is
insufficient
to
constitute
an
unappealable agreed judgment. Andrew Shebay & Co., PLLC v. Bishop,
S.W. 3d
, 2013 WL 1844213, at *1 (Tex. App.--Houston [1
st
Dist. May 2, 2012)(and cases cited therein); DeClaris Associates v.
McCoy Workplace Solutions, L.P., 331 S.W. 3d 556, 560 (Tex. App.-Houston [14th Dist. Feb. 3, 2011)(“simple approval of the form and
substance of the judgment does not suffice to establish a judgment
as an unappealable agreed judgment; the record of the case showed
that the case was contested throughout the proceedings); Durden v.
McClure, 281 S.W. 3d 137, 140 (Tex. App.--San Antonio Nov. 9,
2008)(same); Bonner v. Texas Children’s Hosp., No. 13-03-228-CV,
2006 WL 349510, at *2 & n.5 (Tex. App.--Corpus Christi Feb. 18,
2006)(and cases cited therein); Cash v. Cash, 2005 WL 1787552, at
*3 n.7 (Tex. App.--Austin July 27, 2005); Leeper v. Woodrick, No.
2-04-371-CV, 2005 WL 1475614, at *2 (Tex. App.-–Fort Worth June 23,
2005); Baw v. Baw, 949 S.W. 2d 764, 766-67 (Tex. App.--Dallas 1997,
no pet.).
Furthermore, this Court observes the situation here is
distinguishable from the usual agreed or consent judgment.
The
ruling made by the state court abating and dismissing HSBC’s
application
for
expedited
non-judicial
foreclosure
was
not
discretionary, but was mandated by law, by Texas Rule of Civil
-26-
Procedure 736(10), once the Murphys filed their suit contesting
HSBC’s right to foreclose.
Furthermore the state court’s dismissal
as a matter of law was not appealable under Texas Rule of Civil
Procedure
736(8)
then
in
effect,
and
thus
the
differing
interpretations of the effects of “approval,” “approval of form
only,” and “approval of form and substance” are irrelevant.
The Murphys insist, and point to the docket sheet as evidence,
that in HSBC’s first suit for expedited non-judicial foreclosure,
the Murphys opposed the motion to dismiss at hearings on three
different dates, with the judge ultimately ruling that Texas Rule
of Civil Procedure 736(10) mandated dismissal. They assert that it
is customary for the trial judge to instruct the prevailing party
to prepare an order and have the form approved by counsel, so the
order that issued was not an agreed order, nor was it styled as
such as would be required by Local Rule 3.3.5 if it were an agreed
order.
The Court agrees.
Accordingly, the Court concludes that there was no agreement
of the parties to dismiss HSBC’s first suit for expedited, nonjudicial foreclosure, and thereby the dismissal did not abandon
the 2008 acceleration of the note.
The
Magistrate
Judge
concluded
that
under
Holy
Cross,
abandonment can be accomplished unilaterally when the noteholder
decides to accept payments form a debtor without exacting any
remedies to which it was entitled under the law.
566-67.
She also ruled
-27-
44 S.W. 3d at
Contrary to the Magistrate Judge’s ruling, the Court agrees
with HSBC that it is the law that a note holder cannot unilaterally
rescind acceleration over the objection of the debtor.
Manes v.
Bletsch, 239 S.W. 307, 308 (Tex. App.--Austin 1922)(where debtor
objects to recall of acceleration, payee cannot unilaterally revoke
payor’s exercise of his option to accelerate)(emphasis added by
this Court); Denbina, 516 S.W. 2d at 463 (“It is generally held
that
the
action
of
the
obligee
in
exercising
his
option
to
accelerate payment and declare all of the notes of a series due,
absent some object[ion] of the maker,24 does not render irrevocable
his right to waive the exercise of the option . . . “),
Manes, 239 S.W. 307; Callan, 2014 WL 1314831, at *5.
citing
Here the
evidence demonstrates that the Murphys did object and did not agree
to
the
dismissal
of
HSBC’s
suit
for
expedited,
non-judicial
foreclosure and to Wells Fargo and HSBC’s efforts to enforce the
property lien and foreclose on their home.
Furthermore, in San Antonio Real Estate, 94 Tex. at 446, 61
S.W. at 388-89, the Texas Supreme Court held that in addition to
joint action or agreement to do away with the default and restore
the contract to its original condition, the note holder can waive
its own rights, such as a right to acceleration, and if the debtor
acts in reliance on its inference from the note holder’s conduct or
declarations that the note holder has waived its right, the note
24
In other words, where there is agreement.
-28-
holder can be estopped from relying on the default and asserting
that right to accelerate:
It is not in the power of the creditor by his acts alone
to change the rights of the parties resulting from the
maturity of the debt. But both parties, by their joint
action, may so alter such rights that the creditor would
no longer have the right to demand nor the debtor to pay
the entire indebtedness.
If it be true that, in a
contract like this, where the installments are payable at
given dates, and the debtor has not the right before
default to pay at any other times, such debtor acquires
the right, after default, to pay all of the debt at once
(a question which we need not now decide), any agreement
the parties might make, which would have the effect of
obviating the default and restoring the contract to its
original condition as if it had not been broken, would be
supported by a sufficient consideration.
The debtor
would secure from the creditor further credit, and give
up his right to discharge the whole liability at once.
. . .
But, aside from this, while neither party by
separate action or nonaction could impair the rights of
the other, each could waive his own rights as they
accrued from the default in payment of an installment so
as to estop him from relying upon such default.
To
accomplish this, it would only be necessary that each
should so act as to justify the other in believing and
acting upon the belief that the effect of the failure to
pay an installment was to be disregarded, and that the
contract should stand as if ether had been no default.
The principle of estoppel by waiver would, we think, have
proper application in such a case.
An agreement or
waiver having the effect supposed may be inferred from
the conduct and declarations of the parties as well as
evidenced by their express stipulations. [citations
omitted]
Id. (emphasis added by this Court).
at *6.
See Callan, 2014 WL 1314831,
Here the evidence demonstrates that there was no agreement
of the parties and no joint action, nor did the HSBC waive its own
rights to accelerate.
HSBC did accelerate the note and continued
to do so within the four-year limitations period after it won the
-29-
summary judgment in the First Lawsuit, which is on appeal.
there was no abandonment of the 2008 acceleration.
Thus
HSBC’s failure
to file its second suit timely is its undoing.
In sum, acceleration of a note secured by real property by a
note holder exercising its option to do so can be abandoned by
agreement or other action of the parties or by the holder if it
continues
to
accept
payments
without
available to it upon declared maturity.
exacting
any
remedies
Khan, 371 S.W. 3d at 353.
Here there was no agreement and no joint action to constitute
abandonment of the acceleration.
Moreover HSBC has not acted in
any way to show that it abandoned acceleration of the Note under
statutory remedies available to it.
There was no agreement and
HSBC accordingly has not and could not file a written agreement in
the county clerk’s office to suspend the four-year limitations
period under § 16.036, nor did
foreclosure.
HSBC file suit for judicial
Although a note holder can abandon acceleration of
the note by continuing to accept payments without seeking any
remedies available to it upon declared maturity, there is no
evidence the Murphys have tendered any payments that were accepted
by HSBC, and their denial that they have made such payments has not
been controverted by HSBC. Although HSBC did not have to, it could
have, but did not, file a counterclaim seeking a judgment that the
Murphys were in default in the Murphys’ first state court suit.
Nor has HSBC engaged in any overt, public act evidencing withdrawal
-30-
of the acceleration.
Thus there is no evidence that the June 12,
2008 acceleration was abandoned or that the four-year statute of
limitations was extended. Therefore limitations expired four years
later, on June 12, 2012.
To allow HSBC to unilaterally “re-
accelerate” the Note with its second timely notice of intent to
accelerate in 2011 and its untimely second notice of acceleration
on
June
20,
2012
would
make
a
nullity
of
the
statute
of
limitations. Accordingly HSBC’s second suit seeking expedited nonjudicial forfeiture, filed in August 2012, is time-barred, and
HSBC’s real property lien and a power of sale to enforce the real
property lien is void.
In their Original Petition the Murphys have requested an award
of reasonable attorney’s fees.
Because they are pro se and they
fail to show a legal basis for such an award, the Court finds
currently that they are not entitled to such an award, but grants
them leave to submit a brief on the issue and a request satisfying
the requirements of Johnson v. Georgia Highway Express, Inc., 488
F. 2d 714, 717-19 (5th Cir. 1974), within twenty days of entry of
this Opinion and Order.
If they do so, HSBC shall file a timely
response.
Accordingly, the Court
ORDERS that its Opinion and Order of September 12, 2013 (#19)
is VACATED; Defendants’ motion to dismiss is DENIED; the Murphys’
objection that HSBC failed to abandon its 2008 acceleration of the
-31-
note
is
sustained
and
their
motion
for
summary
judgment
on
limitations is GRANTED; and HSBC’s real property lien and a power
of sale to enforce the real property lien is void
.
Moreover,
because this suit is time-barred, it does not matter what happens
in the appeal of the Murphys’ state court suit regarding HSBC’s
standing
to
irrelevant.
bring
suit
and
in
light
of the time-bar it is
Therefore the Court
ORDERS that the stay is LIFTED and this case is DISMISSED with
prejudice.
A final judgment shall issue by separate order.
SIGNED at Houston, Texas, this
23rd
day of
April , 2014.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
-32-
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