Murphy et al v. HSBC Bank USA
Filing
38
OPINION AND ORDER granting 33 Motion for Reconsideration; vacating Opinion and Order 31 and Final Summary Judgment 32 ; lifting stay; referring case to United States Magistrate Judge to establish a new schedule.(Signed by Judge Melinda Harmon) Parties notified.(rhawkins)
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,
§
§
§
§
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, challenging the validity of the
assignment
of
Plaintiffs
Patrick
O’Brien
Murphy
and Beverly
Murphy’s (“the Murphys’”) mortgage note, is a motion filed by
Defendant HSBC Bank USA, as Trustee for the Wells Fargo Asset
Securities Corporation Home Equity Asset-Backed Certificates 2006-1
(“HSBC”) for rehearing and reconsideration (instrument #33) of the
Court’s April 23, 2014 Opinion and Order (#31) and Final Summary
Judgment (#32), both signed on September 12, 2013.
Objecting
“exceedingly
that
not
inequitable
only
is
because
the
Court’s
Plaintiffs
decision
openly
in
admit
#31
to
intentionally defaulting on their loan to force HSBC’s mortgage
servicer, Wells Fargo Bank USA, to negotiate another refinancing of
their home and then taking every available avenue to thwart HSBC’s
-1-
attempts to foreclose”
1
on their home at 503 Flaghoist Lane,
Houston, Texas 77079, in addition HSBC puts forth three reasons
supporting reconsideration: (1) the order was based on a erroneous
finding that the Murphys objected to the dismissal of the 2008
expedited non-judicial foreclosure proceeding when in fact they
actually caused the dismissal of the proceeding; (2) the Court did
not consider several other reasons supporting the dismissal of the
Murphys’ claim, in particular that the limitations period was
tolled during the pendency of their first lawsuit; and (3) the
Court entered judgment without giving HSBC an opportunity to answer
or conduct discovery, which HSBC raised in its response (#10) and
its motion for continuance (#8).2
After reviewing the record, the Court concedes that in its
recent Opinion and Order (#31) it confused which party put forth
1
#33 at p. 1.
2
Regarding HSBC’s objection to the lack of an opportunity to
perform discovery, in an order (#9) entered on December 19, 2012,
the Court granted HSBC’s request for a continuance (#8) to allow
discovery before filing a response to the Murphys’ counter motion
for summary judgment on limitations grounds (#7). Apparently
HSBC was not aware of the order and on December 26, 2012 filed a
response (#10) to the counter motion because “[t]he Court has not
yet ruled on this motion for a continuance” (#10 at p.3). It
further stated, “To the extent that further discovery is required
to respond to Plaintiffs’ allegations regarding HSBC’s
abandonment of the 2008 acceleration, HSBC urges the Court to
grant its Motion for a Continuance to allow for this discovery.”
HSBC did not subsequently clearly indicate to the Court that it
still needed such time and discovery and, as will be discussed,
the Murphys question whether they do. The Court continues this
review with HSBC’s request in mind.
-2-
which arguments and therefore made errors of fact and law.
The
safest and fairest way to proceed is to grant both Plaintiffs’
motion for rehearing and reconsideration (#20) of the Court’s
September 19, 2013 Opinion and Order (#19) as well as the HSBC’s
motion for reconsideration (#33), and to freshly review issues and
arguments raised by the both sides.
Standard of Review
A motion to reconsider a final judgment is properly viewed as
a motion to alter or amend the judgment under Fed. R. Civ. P. 59(e)
if filed within 28 days after entry of judgment, as is the case
here. “A Rule 59(e) motion ‘calls into question the correctness of
a judgment.’”
Templet v. Hydrochem, Inc., 367 F.3d 473, 478 (5th
Cir. 2004)(quoting In re Transtexas Gas Corp., 303 F.3d 571, 581
(5th Cir. 2002)), cert. denied sub nom Irvin v. Hydrochem, Inc., 543
U.S. 976 (2004). Rule 59(e) should not be used to rehash evidence,
legal theories or arguments that could have been made before entry
of judgment.
Templet, 367 F.3d at 478.
Instead the purpose of the
Rule is to allow a party to correct manifest errors of law or fact
or to present newly discovered evidence.
Id.
Granting a Rule
59(e) motion is an “extraordinary remedy that should be used
sparingly.
Id.
The Court should be mindful of and strike a
balance between the need to bring the litigation to an end and the
need to render equitable decisions on the basis of all the facts.
Id.
-3-
Amended Procedural History
After refinancing a loan on their property at 503 Flaghoist
Lane, Houston, Texas 77079 in 2006,3 in early 2008 the Murphys
admittedly intentionally defaulted on their mortgage payments in an
attempt to force Wells Fargo to negotiate another refinancing of
their home,4 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, then accelerated the loan, sending a notice of
intent
to
accelerate
in
April
2008,
and
on
June
12,
2008,
Plaintiffs received a 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 then retained Wells Fargo as its
loan servicer on the Murphys’ loan.
On July 12, 2008, Wells Fargo
and
for expedited non-judicial
HSBC
filed
an
application
foreclosure in the 295th Judicial District Court of Harris County,
Texas.
To halt the foreclosure, the Murphys then sued Wells Fargo
3
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). Patrick Murphy admitted
during his deposition that they deliberately withheld their
monthly payments for this reason.
4
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].”
-4-
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
(“DTPA”) and sought a declaratory judgment.
Rule of Civil Procedure 736.10,
5
Protection
Act
As required by Texas
on November 24, 2008 the 295th
Judicial District Court abated and dismissed Wells Fargo and HSBC’s
action seeking expedited non-judicial foreclosure.
Subsequently in
the Murphys’ First Lawsuit, after the Murphys challenged the
standing of Wells Fargo or HSBC to foreclose on their house, on
5
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.
Rule 736.10 was amended, and is now Rule 736.11, effective
January 1, 2012. Rule 736.11 stays rather than abates a pending
application for expedited nonjudicial foreclosure if the
respondent files an independent suit challenging the application
for foreclosure. It further requires the respondent to give
prompt notice of the filing of the independent suit to the
applicant for foreclosure to stop the scheduled foreclosure and,
within ten days of filing that suit, to file a motion to dismiss
or vacate with the clerk of the court in which the application
for foreclosure was filed. That clerk must then dismiss the
application proceeding if no order has been signed, or if an
order has been signed, vacate the Rule 736 order. If the
automatic stay under this rule is in effect, any foreclosure sale
of the property is void.
The Court notes that on appeal of the Murphys’ first statecourt lawsuit, the Texas Supreme Court states that it was filed
pursuant to Rule 736.11. See, e.g., Wells Fargo Bank, N.A. v.
S.W. 3d
, 2015 WL 500636, at *1 (Tex. Feb. 6,
Murphy,
2015). The result does not differ here.
-5-
March 29, 2011, the district court granted summary judgment in
favor of Wells Fargo and HSBC, dismissed the Murphys’ claims, and
awarded Defendants fees and costs against the Murphys, personally.6
On appeal, on February 12, 2013, the 14th Court of Appeals in
Houston
affirmed
reversed
the
the
award
district
of
fees
court’s summary judgment, but
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).
The court of appeals’ decision regarding the award of
fees and costs was appealed and was only recently reversed in that
part, and the district court’s judgment was reinstated.
Fargo Bank, N.A. v. Murphy,
S.W. 3d
Wells
, 2015 WL 500636, at *6
(Tex. Feb. 6, 2015).
Meanwhile, after the abatement and dismissal of HSBC’s
application for expedited, nonjudicial foreclosure and the trial
court’s summary judgment in the Murphys’ First Lawsuit in favor of
Wells Fargo and HSBC, HSBC sent Plaintiffs a new notice of intent
to
accelerate
on December 30, 2011,
acceleration on June 20, 2012.8
7
and
a
new
notice
of
On August 16, 2012, HSBC filed a
6
Copy of final summary judgment at #10-6, Ex. F.
7
Copy included in #10-7, Ex. G.
8
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
-6-
new application for non-judicial foreclosure in the 270th Judicial
District.9
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 based on limitations grounds and seeking a
declaratory judgment.
The Murphys’ 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
HSBC
removed the case to this Court on diversity jurisdiction.
On November 13, 2012 HSBC filed a motion to dismiss for
failure to state a claim on the grounds that (1) this action is
barred by res judicata based on the First Lawsuit filed by the
Murphys contesting Wells Fargo and HSBC’s standing to foreclose on
their house; and (2) that this action was not barred by the fouryear statute of limitations.
#7.
Tex. Civ. Prac. & Rem. Code § 16.035.
The Murphys filed a counter motion for summary judgment under
Fed. R. of Civ. P. 12(b)(6) based on the four-year statute of
limitations for effecting a foreclosure sale after acceleration of
the note.
In its Opinion and Order of September 12, 2013 (#19), because
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 instant action, was outside the
four-year limitations period and is time-barred.
9
#10-7 Ex. G.
-7-
the state district court judgment in the Murphys’ First Lawsuit was
still on appeal and thus not final, the Court denied the motion to
dismiss as to the res judicata claim and stayed the case until a
final ruling is issued.
Noting that under Tex. Civ. Prac. & Rem.
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 no later than four years after the day the cause
of action accrues,” and “on expiration of the four-year limitations
period, the real property lien and a power of sale to enforce the
property lien become void,” the Court found that the Murphys had
pleaded sufficient facts to state a claim that HSBC’s mortgage
foreclosure claim accrued when HSBC accelerated the Note on June
12, 200810 and that HSBC’s second application for foreclosure was
not filed until August 16, 2012, more than four years later; thus
taking the Murphys’ well-pleaded facts as true, the Court found
that the Murphys had stated a claim challenging the validity of the
lien on their house.
The Court determined that the Murphys’ limitations claim
failed as a matter of law because, pursuant to § 16.035 of the Tex.
10
Citing Holy Cross Church of God in Christ v. Wolf, 44 S.W.
3d 562, 566 (Tex. 2001)(where the note or deed of trust secured
by real property contains an optional acceleration clause, an
action “accrues when the holder [of the Note or Deed of Trust]
actually exercises its option to accelerate.”). Nevertheless, to
be effective acceleration requires two acts: a notice of intent
to accelerate and a notice of acceleration. Shumway v. Horizon
Credit Corp., 801 S.W. 2d 890, 892 (Tex. 1991), citing Ogden v.
Gibralter Savings Ass’n, 640 S.W. 2d 232, 233 (Tex. 1981).
-8-
Prac. & Rem. Code, the parties by agreement had abandoned the first
acceleration in 2008.
The Court reasoned that not only was HSBC’s
first application for nonjudicial foreclosure automatically abated
and dismissed under § 16.035 once the Murphys filed their First
Lawsuit, but both parties signed the order to do so and the
dismissal was not opposed by HSBC. Furthermore, under Texas law, if
a noteholder exercises its right to abandon acceleration of the
note, the contract is restored to its original condition and the
note to its original maturity date. Khan v. GBAK Properties, Inc.,
371 S.W. 3d 347, 353 (Tex. App.--Houston [1st Dist.] 2012)(a sale
of the property under a power of sale in the deed of trust that
creates a real property lien must be effected not more than four
years after the date the action accrues; when the four-year period
expires, the real property lien and the power of sale to enforce
the lien become void)(citing § 16.035(b); Holy Cross Church, 44
S.W. 3d at 567); Denbina v. City of Hurst, 516 S.W. 2d 460, 463
(Tex. Civ. App.--Tyler 1974, no writ).
Thus because of the agreed
dismissal of the application for expedited nonjudicial foreclosure,
the Court concluded that the original acceleration on June 12, 2008
was abandoned and the contract restored to its original condition.
It
determined
that
the
current
cause
of
action
accrued
subsequently when HSBC sent the Murphys another notice of intent to
accelerate on December 30, 2011 and a second notice of acceleration
on June 20, 2012, the accrual date triggering the running of the
-9-
new statute of limitations (since the former acceleration had been
abandoned).
HSBC filed a new, timely application for nonjudicial
foreclosure on August 16, 2012. The Murphys then filed the instant
suit on September 26, 2012.
Therefore, the Court determined, the
Murphys’ second claim that the second proceeding for foreclosure is
barred by limitations under § 16.035 fails as a matter of law and
must be dismissed under Rule 12(b)(6).
The Murphys filed a motion for rehearing (#20) of #19 on the
limitations bar issue only, which was referred to the Magistrate
Judge for a memorandum and recommendation.
They argued that
abandonment of acceleration requires an 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.
They contended that the Court misconstrued
the order dismissing the original expedited foreclosure action as
one agreed to by the parties when the order simply dismissed the
action and when counsel for HSBC approved only the form of the
order, a common practice in contested issues.
HSBC disagreed, arguing that the law does not require a formal
written agreement or joint action to abandon an acceleration of a
note and that the Court correctly determined that a borrower cannot
strip a lender of its rights by unilaterally acting or refusing to
act.
It maintained that the Court properly found that HSBC’s
conduct
and
the
dismissal
order
-10-
of
the
295th
District
Court
constituted abandonment of the June 12, 2008 acceleration and that
the contract was restored to its original condition.
Magistrate
Judge
Stacy
found
no
error
in
this
Court’s
determination that HSBC had abandoned its 2008 acceleration of the
note by the agreed dismissal of the foreclosure proceeding in
connection with the Murphys’ state court litigation.
#28.
Moreover she concluded that a noteholder may unilaterally abandon
acceleration
of
the
note
without
express
agreement
mortgagor when it shows abandonment by “other action.”
from
the
Clawson v.
GMAC Mortgage, LLC, No. 3:12-CV-0212, 2013 WL 1948128, at *4 (S.D.
Tex. May 9, 2013), citing Holy Cross, 44 S.W. 3d at 566-67
(observing that a noteholder can unilaterally abandon acceleration
and restore the note to its original terms by continuing to accept
payments on the note without exacting available remedies); and
Denbina, 516 S.W. 2d at 463 (finding that noteholder abandoned
acceleration when it took a nonsuit on a counterclaim).
The
Magistrate Judge found that (1) this Court properly took judicial
notice of the public documents, as well as considered documents
attached to the complaint and to the motion to dismiss that were
central to the Plaintiffs’ claims and which demonstrated that the
Murphys’
attorney
approved
the
order
of
dismissal
of
HSBC’s
application in both form and substance, and (2) the approved order
constituted abandonment of the 2008 acceleration. Thus as a matter
of law HSBC could not pursue an expedited foreclosure while the
-11-
Murphys’ lawsuit was pending.
She further concluded that HSBC was
not required to seek foreclosure as a counterclaim in the Murphys’
lawsuit.
Therefore Magistrate Judge Stacy recommended that this
Court deny the Murphys’ motion for rehearing.
The Murphys filed objections (#29 and 30) to the Magistrate
Judge’s Memorandum and Recommendation, which the Court addressed in
its Opinion and Order of April 13, 2014 (#31), the one now under
attack. In that document the Court granted the Murphys’ motion for
rehearing and reconsideration, vacated its previous Opinion and
Order (#19), and granted the Murphys’ motion for summary judgment
(#7) on limitations grounds.
As stated earlier the Court agrees with HSBC that it made
errors of fact and law in that Opinion and Order (#31) that warrant
vacating that Opinion and Order and the Final Summary Judgment.11
11
The Court observes that the Murphys explicitly state (#34
at pp. 2-3) that they
agree with HSBC that this Court, on several occasions,
misnamed the parties when describing positions taken by
them,” but argue “these innocent clerical errors [do
not] constitute such manifest error that this Court
should reverse its opinion. Instead, the Murphys
believe that these innocent errors are mere clerical
mistakes, oversights or omissions that can be corrected
by the Court pursuant to FRCP 60(a). Moreover, the
misnaming of the parties had nothing to do with the
ultimate basis of the Court’s opinion, that the prior
order dismissing the 736 action was not an agreed order
that signaled an agreed abandonment of HSBC’s
acceleration of the note in issue in 2008, and further
that there was no evidence or argument showing
abandonment other than a new notice of acceleration and
736 action, and such action was not sufficient to
-12-
Plaintiffs’ objections (#29 and 30) first assert that the
Court’s “most glaring factual error” was its finding that the state
court order dismissing HSBC’s application for expedited foreclosure
was an agreed order that constituted an abandonment of HSBC’s
acceleration of the note.
The order merely stated, “Pursuant to
TRCP 736, Section 10, this proceeding is therefore automatically
abated and should be dismissed. Accordingly, this proceeding is in
all things Dismissed.”
dismissal
after
#3-2.
Plaintiffs
Rule 736 mandated abatement and
filed
their
petition
contesting
foreclosure in state court. Plaintiffs assert the magistrate judge
incorrectly assumed that signatures approving the form of the order
constituted proof to an agreement between the parties. The Murphys
argue that phrase “approved as to form and substance” has long been
held insufficient to make a judgment a consent judgment not subject
to appeal.
Oryx Energy Company v. Union National Bank of Texas,
895 S.W. 2d 409, 417 (Tex. App.--San Antonio 1995, writ denied);
First Am. Title Co. v. Adams, 829 S.W. 2d 356, 364 (Tex. App.-Corpus Christi 1992, writ denied). There must be other evidence in
the record demonstrating agreement of the parties to the dismissal.
First American, 829 S.W. 2d at 364.
Plaintiffs further contend
that HSBC vigorously opposed the motion to dismiss in three oral
demonstrate abandonment as a matter of law.
The Court finds that the confusion is better and more equitably
cured by a fresh review of the parties’ submissions.
-13-
hearings.
Ex. A.
dismissal.
The judge concluded that TRCP 736(10) mandated
Even if the order had been agreed to, the Murphys
maintain that nowhere does it state that the prior acceleration is
abandoned.
In its challenged Opinion and Order the Court examined the
question whether such an order of dismissal is a sufficient
“agreement” to constitute abandonment of that acceleration of the
note and hereby reaffirms its legal conclusion there, agreeing with
the
Murphys
regarding
that
the
order
of
dismissal
of
the
foreclosure application was insufficient to show that as a matter
of law the parties agreed to abandon the first acceleration:
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
12
courts support the Court’s earlier decision.
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
12
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).
-14-
substance of a judgment is tantamount to an agreement by
the signatory that the judgment meets all of the
essential requirements. 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 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.’ Because
the State did 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 [14th Dist.] 2001, 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
S.W.
judgment. Andrew Shebay & Co., PLLC v. Bishop,
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.
-15-
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 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. (#31 at pp. 24-27)
The Murphys argue that the cases cited by the magistrate judge
for the position that a lender could unilaterally withdraw an
acceleration
were
not
instances
where
the
parties
agreed
to
abandonment in writing, but instead where overt actions evidenced
withdrawal of the acceleration that were known to the public and
the borrower.
See 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)(lender then recorded in the real property records a public
notice that it was rescinding the acceleration at the request of
Clawson to allow Clawson to cure the default); Khan, 371 S.W. 3d at
350 (debtor and Bank of Texas entered into an agreed order that the
bank would not proceed with foreclosure provided that the debtor
made monthly payments on the debt);
Denbina, 516 S.W. 2d at 463
(The City filed a nonsuit of its accelerated claims with the
court.).
See also San Antonio Real Estate Bldg. & Loan Ass’n v.
-16-
Stewart, 61 S.W. 386, 388-89 (Tex. 1901)(“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 also alter such rights that the creditor
would no longer have the right to demand nor the debtor to pay the
entire indebtedness.”).
Here there was no re-commencement by the
Murphys in making regular payments on their mortgage nor has HSBC
accepted such payments to imply abandonment of acceleration of the
note.
the
Instead HSBC filed a counterclaim seeking a judgment that
Murphys
were
in
default,
an
action
inconsistent
with
abandonment of the acceleration and restoration of the note.
The
Murphys further highlight the fact that HSBC had ample remedies to
initiate foreclosure within the limitations period under Texas Rule
of Civil Practice 73513 (effective until January 1, 2012), but chose
not to pursue them.
In sum, there was no adequate agreement of the
parties to dismiss the case nor action or actions by them that
would constitute abandonment of the 2008 acceleration of the note.
13
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.
-17-
Observing that the Security Agreement gives HSBC the right to
choose the most expeditious means to enforce its rights, the
Murphys charge that the magistrate judge ignored ¶¶ 21 and 22 of
the Agreement requiring that in any acceleration notice the lender
must give the debtor notice of the right to file suit to contest
foreclosure, that foreclosure is only accomplished by court order,
and that the Security Agreement incorporates the Rules of Civil
Procedure, including 2008 version of Rules 735 and 736,14 into the
Agreement. Under these Rules HSBC could have and should have acted
within the four-year statute of limitations.
The Murphys insist
that the dismissal order has no prejudicial effect on either party,
and that the Murphys took no action to obstruct HSBC from enforcing
its rights, as provided in Tex. R. Civ. P. 735 and 736(9), but that
HSBC chose not to act within the applicable time.
In sum,
Plaintiffs assert the Court erred as a matter of law in holding
that the circumstances here constituted abandonment.
14
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.
-18-
Without going into detail about the misidentification of the
parties and their arguments, the Court notes that in its Opinion
and Order of April 23, 2014 (#31) it determined (1) there was no
agreement between the sides to dismiss HSBC’s first suit for
expedited judicial foreclosure and thus the order of dismissal did
not abandon HSBC’s 2008 acceleration of the note; (2) as a matter
of law a noteholder cannot unilaterally rescind acceleration over
the objection of the debtor; (3) in addition to an agreement, joint
action can alter the creditors’ right to accelerate and demand
payment of the indebtedness or do away with the default, and a
noteholder can waive its own rights to accelerate the note; and (4)
here there was no agreement, no joint action implying abandonment,
indeed no abandonment, and no waiver by HSBC of its right to
accelerate, and thus HSBC failed to file its second action for
foreclosure timely.
The Court therefore vacated its September 12,
2012 Opinion and Order (#19), denied Defendants’ motion to dismiss,
and granted the Murphys’ motion for summary judgment on limitations
grounds.
HSBC’s motion for reconsideration (#33) of the Court’s most
recent Opinion and Order (#31) argues that the Opinion is based on
a misunderstanding of the facts and emphasizes that contrary to the
Court’s finding, the Murphys did not object to the dismissal of
HSBC’s acceleration proceeding and in fact sought the dismissal and
caused it by filing their state court suit.
-19-
Nor did HSBC contest
the dismissal.
HSBC challenges the Murphys’ contention HSBC
contested the dismissal and that three hearings were held on the
dismissal in state court as incorrect:
was reset twice to a later date.
instead the same hearing
#33, Exs, B, C, and D.
finds that these exhibits prove that HSBC is right.
The Court
Moreover,
notes HSBC, the Murphys did not even file the suit that led to the
dismissal until three days before the last hearing date.
HSBC further argues that the Court read San Antonio Real
Estate, 61 S.W. 386, too narrowly in holding that a lender cannot
unilaterally abandon its acceleration of a note.
San Antonio Real
Estate’s holding is correct on its particular facts, which are
quite different from those here. The case addressed a lender whose
loan did not provide the lender with an option to accelerate upon
default. Moreover if the lender accelerated, the borrower obtained
a right to pay off the loan in full, a right that it did not have
before acceleration.
The Texas Supreme Court ruled that “while
neither party by his separate action or nonaction could impair the
rights of the other, each could waive his own rights” and where
each acted so the other justifiably believed that the effect of the
borrower’s failure to pay an installment would be disregarded and
the contract would continue as if there had been no default, the
principle of estoppel by waiver would apply.
Id. at 388-89. Here,
the Murphys did not obtain any rights by HSBC’s acceleration of the
note, and under the note’s terms they always had the right to pay
-20-
off the loan in full.
Thus a unilateral action by HSBC could
abandon the acceleration.15
Instead of abandonment by agreement of the parties, HSBC
argues that there is evidence here that the acceleration was
abandoned by “other actions of the parties.”
The
2011 notice of
intent to accelerate sent by loan servicer Wells Fargo to the
Murphys (#10 at Ex. G at electronic page numbers 20-33) not only
shows that the previous acceleration of the note was abandoned, but
it
stated
in
part
that
while
the
loan
was
in
default,
the
Plaintiffs could cure the default by paying only the past due
amounts (rather than the full amount that would be due if the loan
were accelerated), and that if the Murphys failed to thus cure the
default within 30 days, HSBC would accelerate the note and require
the full amount be due and payable immediately.
#10 at Ex. G.
This notice’s content made clear that the prior acceleration had
been
abandoned.
HSBC
further
asserts
that
any
statute
limitations that may have been running was thus stopped.
of
Not only
does the notice constitute abandonment of the earlier acceleration,
but there is no evidence that the Murphys objected, so it even
satisfies the Court’s narrow view of San Antonio Real Estate, 61
S.W. 386.
At the least, this second notice of intent to foreclose
15
The right of the lender to unilaterally abandon
acceleration by a notice of rescission is discussed further in
this Court’s opinion in Callan v. Deutsch, 4:13-CV-247, filed
March 23, 2015.
-21-
creates a fact issue to preclude summary judgment.
Furthermore
there is no evidence that HSBC acted in any way other than
indicating that the acceleration of the note had been abandoned:
it agreed to dismissal of the 736 proceeding; it did not seek a
judicial foreclosure in the Murphys’ First Lawsuit; and at the end
of that lawsuit it sent a new notice of intent to accelerate.
Second, HSBC argues that the Court failed to consider the
argument that the limitations period was tolled during the pendency
of the First Lawsuit, demonstrating that the Murphys’ limitations
claims still fail.
Where “a person is prevented from exercising
his legal remedy by the pendency of legal proceedings, the time
during which he is thus prevented should not be counted against him
in determining whether limitations have barred his right.”
v. Mahaney & Higgins, 821 S.W. 2d 154, 157 (Tex. 1991).
Hughes
The rule
applies in the foreclosure context. Khan, 371 S.W. 3d at 356 n.3.16
Although the Murphys argue that HSBC could have pursued
judicial foreclosure as part of their 2008 suit, HSBC argues that
it
had
a
vested
contractual
and
statutory
right
to
pursue
foreclosure through an expedited, nonjudicial foreclosure under
16
The Court observes that footnote 3, citing Hughes v,
Mahaney & Higgins, actually states,
We note that, in his sixth issue, Khan argues that the
statute of limitations was also tolled due to other
ongoing litigation concerning ownership of the
property. . . We do not need to reach this issue
however, because it would not result in greater relief.
See Tex. R. App. P. 47.1/
-22-
Rule 736, a right that the Murphys cannot unilaterally take away by
filing suit and demanding that HSBC pursue a different remedy.
Huston v. U.S. Bank Nat’l Ass’n, 359 S.W. 3d 679, 682 (Tex. App.-Houston [1st Dist.] 2011, no pet.)(“[A] party seeking to foreclose
a home equity loan has three options:
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 Tex. Prop. Code § 51.002; or (3) an
application under Rule 736 for an order allowing foreclosure.17
[citing Rule 735]’”); Kaspar v. Keller, 466 S.W. 2d 326, 329 (Tex.
Civ. App.--Waco 1971, writ ref’d n.r.e.)(“[The mortgagor should not
be permitted to destroy or impair the mortgagee’s contractual right
to foreclosure under the power of sale by the simple expedient of
instituting a suit, whether groundless or meritorious, thereby
compelling the mortgagee to abandon the extra-judicial foreclosure
which he had the right to elect, nullifying his election, and
permitting the mortgagor to control the option as to remedies.”);
Douglas v. NCNB Texas Nat’l Bank, 979 F.2d 1128, 1130 (5th Cir.
1992)(quoting Kaspar). Even if the limitations period began to run
on June 12, 2008, the date of the first acceleration), HSBC insists
that the limitations period was tolled from November 13, 2008 to at
least March 29, 2011 when the state court final judgment was
17
“As its name suggests, Rule 736 provides a faster, more
streamlined alternative to judicial foreclosure.” Huston, 359
S.W. 3d at 682.
-23-
entered
against
Plaintiffs.18
Therefore
the
second,
2012
foreclosure application, filed on August 16, 2012, was timely.
Finally, as noted, HSBC insists the Court should withdraw its
Opinion and Order so that HSBC has an opportunity to file an answer
and take discovery, in particular on “other actions” of the parties
that could constitute abandonment.
Plaintiffs’ Response (#34)
The Murphys reiterate that HSBC had other remedies to enforce
its rights and the statement, “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,” in Rule 736(9)
of the Rules for Home Equity loans, promulgated by the Texas
Supreme Court. The Murphys insist that both parties were on notice
that all claims, including HSBC’s right to seek foreclosure, were
still in play. To accept HSBC’s argument would destroy the defense
of limitations-–the bank could reaccelerate every three years and
364 days and avoid limitations forever.
Moreover they emphasize
that HSBC failed to come up with evidence of actions other than new
acceleration letters to constitute abandonment.
The Murphys maintain that prior litigation is not enough to
invoke the tolling of limitations under Texas law.
18
The Hughes
As noted, that judgment was actually not final until the
Texas Supreme Court issued its ruling, 2015 WL 500636, on
February 6, 2015.
-24-
case, 821 S.W. 2d 154 (holding that when an attorney commits
malpractice in the prosecution or defense of a claim that results
in litigation, the statue of limitations on the malpractice claim
against the attorney is tolled until all appeals on the underlying
claim
are
exhausted),
malpractice
case
foreclosure,
or
and
is
inapposite.
initiating
expedited
hearing
a
This
is
judicial
under
Rule
not
or
a
legal
nonjudicial
736,
is
not
inconsistent with the position HSBC was taking in the earlier
litigation.
HSBC simply failed to exercise its rights timely.
This Court notes that the Fifth Circuit has taken the Murphys’
position in Industrial Indem. Co. v. Chapman and Cutler, 22 F.3d
1346, 1356 n.22 (5th Cir. 1994)(some citations omitted):
Appellant’s reliance upon the cases of Hughes v. Mahaney
and Higgins, 821 S.W. 2d 154 (Tex. 1991)[and others] . .
. is misplaced. Those decisions together set forth the
proposition “that when an attorney commits malpractice in
the prosecution or defense of a claim that results in
litigation, the statute of limitations on the malpractice
claim against the attorney is tolled until all appeals on
the underlying claim are exhausted. . . . The Supreme
Court of Texas, in Hughes, explained the rule as stemming
from the desire to allow the client to avoid “adopting
inherently inconsistent litigation postures in the
underlying case [against the third party] and in the
malpractice case.” Hughes, 821 S.W. 2d at 156. . . . See
Hoover v. Gregory, 835 S.W. 2d 668, 675 (Tex. App.-Dallas 1992, writ denied)(commenting that “[w]e interpret
Hughes narrowly as controlling in legal malpractice cases
when a malpractice suit is brought against an attorney in
the course of litigating the complainant’s underlying
claim”)(emphasis added).
Thus this Court rejects HSBC’s tolling argument based on Hughes.
The Murphys also argue that HSBC’s requests for discovery,
-25-
which sounds like a fishing expedition, will not lead to evidence
of abandonment.
Wells Fargo, the servicer and agent for HSBC was
a party to the previous litigation and was represented by the same
law firm that now represents HSBC.
In the earlier litigation the
attorneys served requests for production and deposed the Murphys
for more than eight hours, and therefore have every document the
Murphys possessed relevant to this dispute. HSBC should be able to
be far more specific about what documents it would find to support
abandonment, and where and how they may be found.
HSBC’s Supplement (#35)
HSBC brings to the Court’s attention recent orders in two
cases relevant to this dispute:
Leonard v. Ocwen Loan Service,
LLC, No. H-13-3019, 2014 WL 4161769 (S.D. Tex. Aug. 19, 2014), and
Boren v. US National Bank Assoc., No. H-13-2160, 2014 WL 5486100
(S.D. Tex. Oct. 29, 2014).
In Leonard, 2014 WL 4161769 at *4, the Honorable Nancy Atlas
held, “Joint action of the parties is not required to abandon the
acceleration.
Rather,
a
party
may
abandon
unilaterally through its own actions.”
the
acceleration
In an analysis that
demonstrates why this Court’s reliance on San Antonio Real Estate
Building & Loan Assoc. v. Stewart, 61 S.W. 386, is too narrow and
that supports HSBC’s position, Judge Atlas stated,
The Court recognizes that an early Texas Supreme Court
case, San Antonio Real Estate Bldg. & Loan Ass’n v.
Stewart, 61 S.W. 386, (Tex. 1901), suggests that “neither
-26-
party by his separate action or nonaction [may] impair
the rights of the other,” id., at 388-89.
Stewart,
however, is inapposite on the facts presented. As Judge
Costa stated in Clawson, “Stewart was premised on the
situation in which the failure to pay an installment ipso
facto gives rise to the cause of action upon the whole
debt; the opinion explicitly distinguishes situations,
like the present, in which the contract is regarded as
only giving to the creditor the right of election.”
Clawson, 2013 WL 1948128, at *4 (citing Stewart, 61 S.W.
3d at 388).
Leonard, 2014 WL 4161769 at *4 n.4.
HSBC observes that, as shown
by Leonard, in Stewart the acceleration happened automatically and
worked for the benefit of both parties.
In contrast here the
Murphys obtained no rights because of the acceleration since under
the terms of the note, they always had the right to pay the loan in
full without any prepayment penalty.
at
p.
14
Prepay.”).
(Ex.
A,
Note,
at
#1, Orig. Petition, Ex. B.2
Section
5,
“Borrower’s
Right
to
Since they obtained no rights, unilateral action by
HSBC would abandon the acceleration.
Furthermore, HSBC points out that the same kind of evidence
exists here as existed in Leonard and Boren to demonstrate that the
lender abandoned its previous acceleration.
In Leonard at *5,
Judge Atlas found that the fact that the loan servicer sent a new
notice of intent to accelerate that demanded less than the full
amount of the debt was evidence of abandonment of the prior notice
of acceleration.
In Boren, 2014 WL 5486100 at *1-2, The Honorable
Grey Miller found that the acceleration was abandoned as a matter
of law when the lender sent only a new default letter and notice of
-27-
intent to accelerate that demanded less than the full amount of the
debt.
Therefore
HSBC
asks
the
Court
to
grant
its
motion
for
rehearing and reconsideration and to dismiss the limitations claims
and
to
deny
Plaintiffs’
motion
for
summary
judgment.
Alternatively, it asks the Court to rescind its order granting
Plaintiffs’ motion for summary judgment and to allow HSBC to answer
and defend this case on the merits.
Court’s Decision
As indicated, because the Court concedes that its prior
Opinion and Order contained errors of fact and law, the Court
concludes that HSBC’s current motion to rehear and reconsider (#33)
the Court’s Opinion and Order (#31) and Final Summary Judgment
(#32) should be granted and its Opinion and Order (#31) and Final
Summary Judgment (#32) should be vacated.
Thus the Court reviews
the issues de novo.
First, after reviewing the record, the Court agrees that the
Murphys
did
foreclosure
not
object
proceeding,
to
but
the
that
2008
expedited,
under
Texas
non-judicial
Rule
of
Civil
Procedure 736.10 (or current 736.11) they actually caused the
automatic dismissal by filing their independent state court suit
challenging Wells Fargo’s standing to pursue foreclosure.
Thus the
issue before the Court is whether the first notice of acceleration
was abandoned.
As noted, Texas courts and courts in the Fifth Circuit have
-28-
held
that
contract
“parties
to
its
can
abandon
original
terms
acceleration
by
the
and
parties’
restore
the
agreement
or
actions.” Khan, 371 S.W. 3d at 356 (emphasis added by this Court).
As the Court indicated supra, the order of dismissal of the first
action for expedited foreclosure is insufficient to satisfy the
first prong and HSBC has failed to show another agreement fo the
parties.
Thus the Court turns to “actions” of the parties.
A threshold
issue is whether there must be joint actions or whether HSBC alone
could abandon the first acceleration unilaterally by its own
actions.
such
The Court concludes that it erred in determining that any
actions
establishing
had
that
to
be
the
joint.
There is authority clearly
lender’s or loan servicer’s action
constituting abandonment of acceleration can be unilateral.
Where
the deed of trust contains an optional acceleration clause, default
by itself does not start limitations running, but the cause of
action accrues only when the note holder exercises its option to
accelerate.
Holy Cross, 44 S.W. 3d at 566.
The noteholder who
exercises its option to accelerate can also abandon it by its own
actions.
See, e.g., Khan, 371 S.W. 3d at 353 (“A noteholder who
exercises its option to accelerate may ‘abandon acceleration if the
holder continues to accept payments without exacting any remedies
available to it upon declared maturity,’”), citing Holy Cross, 44
S.W. 3d at 566-67; DTND v. Sierra Investments, LLC v. Bank of New
York Mellon Trust Co., 958 F. Supp. 2d 738, 749-50 (W.D. Tex.
2013)(holding that unilateral notices of rescission were sufficient
-29-
to abandon acceleration); Clawson, 2013 WL 1948128 at *4 (“a
noteholder may abandon acceleration ‘without express agreement from
the borrower’” and concluding the lender abandoned acceleration
when it filed a notice of rescission); Leonard, 2014 WL 4161769, at
*5 (“Joint action of the parties is not required to abandon
acceleration.
Rather, a party may abandon acceleration ‘without
express agreement from the borrower.’”; finding that defendants
abandoned previous acceleration of the debt by sending account
statements requesting less than the full balance);
Bitterroot
Holdings, LLC v. MTGLQ Investors, LP, Civ. No. 5:14-CV-862-DAE,
2015 WL 363196, at *6 (W.D. Tex. Jan. 27, 2015)(“Here, the prior
Notices of Acceleration issued by Citimortgage, MTGLQ’s predecessor
in interest, were abandoned when Citimortgage dismissed its claims
without prejudice in state court.”).19
See Callahan, No. 4:13-CV-
249 (reviewing cases).
The issue becomes whether HSBC’s took an action unilaterally
that constituted abandonment of its 2008 acceleration of the note.
HSBC claims that the 2011 notice of intent to accelerate (#10 at
Ex. G at electronic page numbers 20-33), which was filed before the
19
This Court notes that there is authority holding that
acceleration “may not be abandoned unilaterally where the
borrower has detrimentally relied upon the acceleration.”
See,
e.g., In re Rosas, Bkrtcy. No. 13-52402-CAG, 2014 WL 1779437 at
*10 (Bkrtcy. S.D. Tex. May 5, 2014), citing Swoboda v. Wilshire
Credit Corp., 975 S.W. 2d 770, 776-77 (Tex. App.--Corpus Christi
1998, pet. denied), disapproved of on other grounds, Holy Cross,
44 S.W. 3d at 570; In re Adu-Kofi, 94 B.R. 14, 15 (Bkrtcy. D.R.I.
1988). There are no allegations in the instant case that the
Murphys detrimentally relied on the 2008 acceleration of the
note.
-30-
four-year statute of limitations on the original filing of the suit
in June 2008, not only shows that the previous acceleration of the
note was abandoned, but its statement that although the loan was in
default, the Plaintiffs could cure the default by paying only the
past due amounts (rather than the full amount that would be due if
the loan were accelerated), and that if the Murphys failed to thus
cure the default within 30 days, HSBC would accelerate the note and
require the full amount be due and payable immediately), stops the
statute of limitations from running and constitutes abandonment of
its second acceleration of that note.
#10 at Ex. G.
The Court
finds that it at least raises a genuine issue of material fact
whether it did.
When a cause of action accrues is a question of
law for the court, while whether a holder has accelerated a note is
a question of fact.
Holy Cross, 44 S.W. 3d at 568.
Accordingly, for the reasons stated above, the Court
ORDERS that HSBC’s current motion to rehear and reconsider
(#33) the Court’s Opinion and Order and Final Summary Judgment is
GRANTED and that its Opinion and Order (#31) and Final Summary
Judgment (#32) are VACATED.
material
fact
as
to
Because there is a genuine issue of
whether
the
second
notice
of
intent
to
foreclose (#10 at Ex. G at electronic pages 20-33) constituted
abandonment of the second acceleration of the note, the Court
ORDERS that dismissal or summary judgment on that ground is
DENIED.
Given the final judgment in the state court suit filed by
the Murphys, the Court grants leave to HSBC to reurge its motion
-31-
for summary judgment based on res judicata within 20 days if HSBC
wishes to pursue the issue, and to Plaintiffs to file a timely
response.
The Court finds that the Murphys’ charges about the HSBC’s
access to discovery in the early litigation cannot be resolved on
the limited record here.
The Court also is aware that under Rule
56(d), a party seeking a continuance to do further discovery cannot
merely vaguely claim it needs such discovery without explaining how
the additional discovery will create a genuine issue of material
Krim v. BancTexas Group, Inc., 989 F.2d 1435, 1442 (5th Cir.
fact.
1993).
See also Securities & Exchange Comm’n v. Spence & Green
Chem. Co., 612 F.2d 896, 901 (5th Cir. 1980)(“The nonmovant may not
simply rely on vague assertions that additional discovery will
produce needed, but unspecified, facts.”). Nevertheless, “‘Rule 56
does not require that any discovery take place before summary
judgment can be granted; if a party cannot adequately defend such
a motion, Rule 56(d) is his remedy.’”
Emrich v. JP Morgan Chase
Bank, N.A., 575 Fed. Appx. 502, 504 (5th Cir. July 22, 2014),
quoting Washington v. Allstate Ins. Co., 901 F.2d 1281, 1285 (5th
Cir. 1990). Here, not only did HSBC file a motion for continuance,
but the Court also stayed this case until the state court’s
determination of Defendants’ standing was finally resolved, as it
has been now.
Thus in the interests of justice the Court further
ORDERS that the stay is lifted and that this case is REFERRED
-32-
to United States Magistrate Judge to establish a new schedule.
SIGNED at Houston, Texas, this
25th
day of
March , 2015.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
-33-
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