Billiter v. Central Mortgage Company et al

Filing 42

MEMORANDUM OPINION denying 33 MOTION for Summary Judgment , granting in part 32 AMENDED 17 MOTION MOTION for Summary Judgment (Signed by Magistrate Judge Nancy K. Johnson) Parties notified.(sjones, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
LLOYD BILLITER, JR.,

§
§
§
§
§
§
§
§
§
§

Plaintiff,

v.
CENTRAL MORTGAGE COMPANY,
Defendant.

CIVIL

ACTION

NO.

H-14-663

Central

Mortgage

MEMORANDUM OPINION
Pending

before

the

court1

is

Defendant

Company’s (“Defendant”) Amended Motion for Summary Judgment (Doc.
32) and Lloyd Billiter, Jr., (“Plaintiff”)’s Motion for Final
Summary

Judgment

(Doc.

33).

The

court

has

considered

the

motions, the responses thereto, all relevant filings, and the
applicable law.

For the reasons set forth below, Defendant’s

motion is GRANTED in part and DENIED in part, and Plaintiff’s
motion is DENIED.
I.

Case Background

On January 25, 2011, Plaintiff obtained a home equity loan
in the amount of $96,750.00.2

On September 14, 2012, Plaintiff

1
The parties consented to proceed before the undersigned magistrate
judge for all proceedings, including trial and final judgment, pursuant to 28
U.S.C. § 636(c) and Federal Rule of Civil Procedure (“Rule”) 73. Docs. 10, 11.
2

Note.

See Doc. 32-1, Ex. A-1 to Def.’s Am. Mot. for Summ. J., Home Equity

was sent a letter advising him that he was in default on his
note.3

On January 8, 2013, the original lender assigned the deed

of trust to Defendant.4
On

June

letter

21,

stating

2013,

that

Defendant’s

Plaintiff

agent

remained

mailed

in

Plaintiff

default

and

a

that

Defendant had elected to accelerate the maturity of the debt.5
Plaintiff responded by sending Defendant a notice of request
to cure on December 11, 2013, claiming multiple violations of the
Texas

Constitution

and

demanding

that

Defendant

cure

all

violations within sixty days.6
On December 23, 2013, Defendant responded to Plaintiff’s
notice.7

Defendant

Constitution
requested

by

but

did

denied
provide

Plaintiff.8

any

violations

copies
On

of

February

of

closing
7,

the

Texas

documents

2014,

as

Defendant

3
See Doc. 32-5, Ex. A-4 to Def.’s Am. Mot. for Summ. J., Notice of
Default Letter.
4

See Doc. 32-4, Ex. A-3 to Def.’s Am. Mot. for Summ. J., Assignment
of Deed of Trust.
5

See Doc. 32-14, Ex. B-1 to Def.’s Am. Mot. for Summ. J., Letter Dated
June 21, 2013.
6

See Doc. 32-6, Ex. A-5 to Def.’s Am. Mot. for Summ. J., Request to

Cure Letter.
7

See Doc. 32-7, Ex. A-6 to Def.’s Mot. for Summ. J., Dec. 23, 2013
Response to Request to Cure Letter.
8

See id.

2

supplemented its December 23, 2013 response.9
Plaintiff filed a petition in Harris County District Court
on

February

Constitution,
judgment

11,

2014,

breach

voiding

the

of

alleging
contract,

loan.10

On

violations
and

of

seeking

March

17,

the

a

Texas

declaratory

2014,

Defendant

removed the case to this court based on diversity jurisdiction.11
On May 8, 2014, Defendant filed its answer and counterclaim,
alleging bad faith and seeking a declaratory judgment that it had
a valid lien on Plaintiff’s property, and that it was entitled to
a non-judicial foreclosure, a writ of possession, and attorney’s
fees.12
On

May

19,

judgment.13

On

judgment

the

on

2014,
June

Defendant

19,

2014,

pleadings.14

filed

a

Plaintiff
On

October

motion
filed
8,

for
a

2014,

summary

motion
the

for

court

denied both Plaintiff and Defendant’s motions and allowed both
parties to refile their motions by November 7, 2014.15

9

See Doc. 32-7, Ex. A-6 to Def.’s Mot. for Summ. J., Feb. 6, 2014
Supplemental Response to Request to Cure Letter.
10

See Doc. 1-3, Ex. 3 to Def.’s Notice of Removal, Pl.’s State Court

11

See Doc. 1, Def.’s Notice of Removal.

12

See Doc. 15, Def.’s Answer & Countercl.

13

See Doc. 17, Def.’s Mot. for Summ. J.

14

See Doc. 25, Pl.’s Mot. for J. on the Pleadings.

15

See Doc. 31, Order Den. Mot. for Summ. J. and J. on the Pleadings.

Pet.

3

On November 6, 2014, the parties filed the present motions.
II.

Summary Judgment Standard

Summary judgment is warranted when the evidence reveals that
no genuine dispute exists regarding any material fact and the
moving party is entitled to judgment as a matter of law.
Civ. P. 56(c);

Celotex

Corp.

v.

Catrett,

477

U.S.

Fed. R.
317,

322

(1986); Pustejovsky v. Pliva, Inc., 623 F.3d 271, 277 (5th Cir.
2010).

A

material

fact

is

a

fact

that

is

identified

by

applicable substantive law as critical to the outcome of the
suit.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);

Ameristar Jet Charter, Inc. v. Signal Composites, Inc., 271 F.3d
624, 626 (5th Cir. 2001).

To be genuine, the dispute regarding a

material

supported

fact

must

be

by

evidence

such

that

a

reasonable jury could resolve the issue in favor of either party.
Anderson, 477 U.S. at 250; TIG Ins. Co. v. Sedgwick James of
Wash., 276 F.3d 754, 759 (5th Cir. 2002).
The

movant

must

inform

the

court

of

the

basis

for

the

summary judgment motion and must point to relevant excerpts from
pleadings, depositions, answers to interrogatories, admissions,
or affidavits that demonstrate the absence of genuine factual
issues.

Celotex Corp., 477 U.S. at 323; Chiu v. Plano Indep.

School Dist., 260 F.3d 330, 342 (5th Cir. 2001).
4

If the moving

party can show that the facts are not in dispute, the party
opposing

summary

judgment

must

go

beyond

the

pleadings

and

proffer evidence demonstrating that genuine issues of material
fact do exist that must be resolved at trial.

See Celotex Corp.,

477 U.S. at 324.
When considering the evidence, “[d]oubts are to be resolved
in favor of the nonmoving party, and any reasonable inferences
are to be drawn in favor of that party.”

Evans v. City of

Houston, 246 F.3d 344, 348 (5th Cir. 2001); see also Boston Old
Colony Ins. Co. v. Tiner Assocs. Inc., 288 F.3d 222, 227 (5th
Cir.

2002).

The

court

should

not

“weigh

evidence,

assess

credibility, or determine the most reasonable inference to be
drawn from the evidence.”

Honore v. Douglas, 833 F.2d 565, 567

(5th Cir. 1987).
Even when a nonmovant fails to respond to a motion for
summary judgment, the movant still bears the burden of proving
that no issue of material fact exists.

Celotex, 477 U.S. at 323.

However, the court will only resolve factual controversies in
favor of the nonmoving party when a controversy actually exists;
in other words, no controversy exists when factual allegations
are not challenged by the nonmoving party.

Little v. Liquid Air

Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (relying on Lujan v.
National

Wildlife

Federation,

497
5

U.S.

871,

888

(1990)).

Therefore, assumptions or inferences that the nonmoving party
could or would prove the necessary facts will not be made.
III.
A.

Id.

Analysis

Evidentiary Issues
Prior to considering Plaintiff and Defendant’s motions, the

court addresses the admissibility of Plaintiff’s November 5, 2014
affidavit filed in support of his summary judgment motion.
Defendant objects to Plaintiff’s affidavit as conclusory,
inconsistent

with

prior

pleadings,

and

containing

hearsay.

Plaintiff did not respond to Defendant’s objections.
Defendant

argues

that

Plaintiff’s

statements

in

the

affidavit contradict the factual allegations of his pleading.

It

is well-settled that the court does not have to consider an
affidavit that impeaches the declarant’s prior sworn testimony.
S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 495 (5th Cir.
1996).

However, Plaintiff’s petition is not sworn testimony, and

the court need not consider pleadings as affidavits unless they
meet the requirements of Federal Rule of Civil Procedure (“Rule”)
56(e).

See Fed. R. Civ. P. 56(e); Lodge Hall Music, Inc. v. Waco

Wrangler

Club,

Defendant’s

Inc.,

objection

831

F.2d

based

on

overruled.
6

77,

80

(5th

inconsistent

Cir.

1987).

testimony

is

Defendant
paragraphs

further

six

and

argues

eight

that

contain

Plaintiff’s
inadmissible

statements

in

hearsay.

In

paragraph six, Plaintiff states that “I was told by the loan
advisor . . . that I received this interest rate because of my
credit rating at the time, and because I opted for a fifteenyears maturity date and payment plan, rather than thirty years
[sic].

I did not pay a fee in exchange for getting a low

interest rate.”16

In paragraph eight, Plaintiff states that “I

was told that if I wanted to receive the loan, I had no choice
but

to

sign

this

acknowledgment.”

The

court

finds

that

Plaintiff’s statements, relating the out-of-court statements of
a non-party, are inadmissible hearsay, and sustains Defendant’s
objection.
Finally,
contains

Defendant

conclusory

argues

statements

that
without

Plaintiff’s
a

factual

affidavit
basis.

In

paragraph four, Plaintiff states that he was charged fees of
“around almost five percent” because he did not know the lender
was not allowed to charge him more than three percent.17

This

statement is inadmissible, as Plaintiff is speculating as to the
reason he was charged a fee.

See Fed. R. Evid. 701.

It also

16

Doc. 33-5 Ex. 5 to Pl.’s Mot. for Final Summ. J, Aff. of Lloyd
Billiter p. 1-2.
17
Doc. 33-5 Ex. 5 to Pl.’s Mot. for Final Summ. Summ. J, Aff. of Lloyd
Billiter p. 1.

7

purports to state a conclusion of law by interpreting discount
points as closing fees.

Unsupported affidavits setting forth

conclusions of law are insufficient to either support or defeat a
motion for summary judgment.
F.2d

1212,

(5th

1221

Galindo v. Precision Am. Corp., 754

Cir.

1985).

Defendant’s

objections

regarding those statements are sustained, and the court will not
consider

paragraph

four,

or

the

hearsay

contained

within

paragraphs six and eight in its analysis.
B.

Motions for Summary Judgment
Both

Plaintiff

judgment.

and

Defendant

have

moved

for

summary

Plaintiff argues that Defendant committed multiple

violations of the Texas Constitution and thereby breached its
contract with Plaintiff.

Plaintiff also seeks a declaratory

judgment

mortgage

January

finding
25,

2011

that

the

equity

note

is

lien
void.

associated
Defendant

with

the

seeks

a

declaratory judgment, non-judicial foreclosure, and a writ of
possession related to Plaintiff’s default on the note payments.
Both parties seek to recover attorney’s fees.

The court will

consider the parties’ claims in turn.
1.

Texas Constitution Claims

Plaintiff claims that Defendant violated six provisions of
the Texas Constitution and moves for summary judgment based on
8

two of the six violations.

Defendant moves for summary judgment

on each of Plaintiff’s six claims.
a.

Fair Market Value

Plaintiff alleges that the principal amount of the loan,
$96,750.00, exceeded eighty percent of the fair market value of
the home, in violation of Article XVI, Section 50(a)(6)(B) of the
Texas Constitution.

In his complaint, Plaintiff stated that the

Harris County Appraisal District valued the home at $110,863.00,
thus, the loan amount of $96,750.00 was in excess of the eighty
percent rule.
Defendant responds that the appraisal value is not the fair
market value, and that the fair market value of the property was
$129,000.
fair

In support, Defendant cites to an acknowledgment of

market

value

signed

by

Plaintiff

on

January

25,

2011,

wherein he confirmed that the fair market value of the property
was $129,000 at the time of loan.18
market value was $103,200.

Eighty percent of the fair

Plaintiff does not contest this

acknowledgment in his motion or responses.
Based on Plaintiff’s acknowledgment that the fair market
value of the property was $129,000, the court finds that there is
no genuine issue of material fact that the loan did not violate

18

See Doc. 32-10, Ex. A-9
Acknowledgment of Fair Market Value.

9

to

Def.’s

Am.

Mot.

for

Summ.

J.,

the

eighty

percent

limitation

found

in

Article

XVI,

Section

50(a)(6)(B) of the Texas Constitution.
b.

Three Percent Rule

Plaintiff

alleges

that

Defendant

violated

the

Texas

Constitution, Article XVI, Section 50(a)(6)(E), which provides
that a lender on a home equity loan may not charge a borrower
fees

“that

are

necessary

to

originate,

evaluate,

maintain,

record, insure, or service the extension of credit that exceed,
in the aggregate, three percent of the original principal amount
of the extension of credit” (“the three percent rule”).

Id.

In this case, the total amount of the loan was $96,750.00,
therefore Defendant could not charge fees in excess of $2,902.50
without violating the three percent rule.

Plaintiff argues that

Defendant actually charged fees in the amount of $4,610.83.19
Defendant contends that Plaintiff mischaracterizes $2,297.81 of
discount points as fees.
In Cerda v. 2004-EQR1 L.L.C., 612 F.3d 781, 794 (5th Cir.
2010), the Fifth Circuit held that discount points paid in a home
equity

loan

should

not

have

been

characterized

as

origination fees and included the three percent cap on fees.

19

loan
Id.

See Doc. 34, Pl.’s Resp. to Def.’s Mot. for Summ. J. p. 6.
Originally, Plaintiff stated that it was charged fees of $7,505.10. See Doc. 13, Ex. 3 to Not. of Removal, Pl.’s Original Pet. p. 9.

10

The court held that discount points are a form of interest, and
therefore not considered fees for the purposes of the three
percent rule.

Id. at 794-95.

Plaintiff

argues

that

the

disputed

$2,297.81

was

an

origination fee, not discount points, and that Defendant has “no
credible proof” that the $2,297.81 in listed as discount points
in one part of the settlement statement are the same as an
“origination
document.20

charge”

in

an

identical

amount

within

the

same

Plaintiff argues that the Texas Supreme Court has

ruled in Fin. Comm’n of Tex v. Norwood, 418 S.W. 566 (Tex. 2014),
that lenders are prohibited from excluding discount points from
the three percent rule “unless the points were legitimate and
true.”21

In

Norwood,

the

Texas

Supreme

Court

included

a

supplemental opinion to clarify that discount points paid to
lower an interest rate substitute for interest “and thus are not
subject to the [three percent] cap.”

Id. at 596.

The court is not convinced by Plaintiff’s argument in light
of the closing documents.

Here, the HUD-1 Settlement Statement,

Line 801, states that the “origination charge” for the loan is
“$0.00."22

Line 802, “Your credit or charge (points) for the

20

See Doc. 34, Pl.’s Resp. to Def.’s Mot. for Summ. J. p. 5.

21

See id. p. 8.

22

See Doc. 1-3, Ex. 5 to Doc. 1, Not. of Removal, Settlement Statement,

p. 31.

11

specific rate chosen,” shows $2,297.81.

The next line, Line 803,

adds both Lines 801 and 802, characterizes the sum as “adjusted
origination charges” and shows $2,297.81.23
the

document

origination
Point

shows

that

charge.

$2,297.81

Further,

Acknowledgment,”

is

for

Defendant

signed

by

The clear reading of
points,

produced

Plaintiff,

a

not

an

“Discount

confirming

that

Plaintiff would pay $2,297.81 in discount points in exchange for
a lower interest rate.24
The
points.

court

finds

that

the

$2,297.81

represented

discount

As discount points are not included in the three percent

rule, the court finds there is no genuine issue of material fact
that Plaintiff’s fees for the purposes of Article XVI, Section
50(a)(6)(E)

of

the

Texas

Constitution

were

less

than

three

percent of the loan principal.
c.

The Twelve Day Rule

Plaintiff alleges the loan violated Article XVI, Section
50(a)(6)(M) of the Texas Constitution by closing within twelve
days of the original loan application.

Defendant responds that

Plaintiff submitted his loan application on November 29, 2010,
signed the application on November 30, 2010, and closed on the
23

Id.

24

See Doc. 38-1, Ex. A-1 to Def.’s Reply to P’s Resp., Discount Point
Acknowledgment.

12

loan on January 25, 2011.25

The loan application shows that

Plaintiff signed and dated the application on November 30, 2010
in three separate places.26
acknowledgment

of

receipt

Additionally, Plaintiff signed an
of

notice

concerning

extensions

of

credit, wherein Plaintiff acknowledged that he was provided his
application for an extension of credit at least twelve days prior
to the acknowledgment.27

Plaintiff did not contest this issue in

his motion or his replies.

The court finds no genuine dispute of

material fact that the loan closed more than twelve days after
Plaintiff’s loan application.
d.

Receipt of HUD-1 Statement

In his complaint, Plaintiff argues that he did not receive a
HUD-1 statement one day before closing as required by Article XVI
Section 50(a)(6)(M)(ii) of the Texas Constitution because the
HUD-1 statement was provided and signed at closing.

Defendant

argues that Plaintiff signed a sworn statement acknowledging he
received a copy of the settlement statement prior to the closing,
and that the fees and charges on that statement were identical to

25

See Doc. 32-11, Ex. A-10 to Def.’s Am. Mot. for Summ. J., Uniform
Residential Loan Application.
26

Id.

27

See Doc. 32-7, Ex. A-6 to Def.’s Am. Mot. for Summ.
Acknowledgment of Receipt of Notice Concerning Extension of Credit.

13

J.,

the amounts disclosed at the closing.28

As Plaintiff does not

dispute this sworn statement, the court finds there is no genuine
issue of material fact regarding Plaintiff’s receipt of the HUD-1
statement one day prior to the loan’s closing.
e.

Receipt of Loan Documents

Plaintiff alleges that he did not receive a copy of the
final

loan

documents,

in

violation

of

Article

50(a)(6)(Q)(v) of the Texas Constitution.
that

Plaintiff

received

signed

copies

Additionally,

of

the

an

acknowledgment

XVI,

Section

Defendant responds
stating

all

documents

related

record

indicates

that

to

that
the

before

he

had

loan.29

filing

suit,

Defendant provided Plaintiff with copies of loan documents after
Plaintiff

requested

them.30

Plaintiff

does

not

respond

to

Defendant’s evidence in either its motion or its responses.
Thus, there is no dispute of material fact that Plaintiff was
provided a copy of the final loan documents as required by the
Texas Constitution.

28

See Doc. 32-12, Ex. A-11 to Def.’s Am. Mot. for Summ. J., Owner’s
Acknowledgment of Receiving Copy of Loan Application and Fees.
29
See Doc. 32-13, Ex. A-12 to Def.’s Am. Mot. for Summ. J.,
Acknowledgment of Receipt of Notice Concerning Extensions of Credit and Receipt
of Documents.
30

See Doc. 32-7, Ex. A-6 to Def.’s Am. Mot. for Summ. J., Dec. 23, 2013

Letter.

14

f.

Acknowledgment of Fair Market Value

Finally, Plaintiff argues that either he did not execute an
acknowledgment

of

fair

market

value,

or

that

such

an

acknowledgment was not provided to him as required by Article
XVI,

Section

50(a)(6)(Q)(ix)

of

the

Texas

Constitution.

In

response, Defendant produced an acknowledgment of fair market
value

signed

by

Plaintiff

but

not

signed

by

a

lender’s

representative.31
While Plaintiff does not dispute his signature on the fair
market value agreement, Plaintiff argues that a blank signature
line on the form indicates that Defendant never executed the
acknowledgment of fair market value.32

Plaintiff also argues

that the fair market value acknowledgment was not notarized.33
In

response,

functions

as

notarization

Defendant
an

argues

electronic

requirement

a

line

signature,

under

the

identifying
and
Texas

that

the

there

lender
is

no

Constitution.34

Defendant further argues that the lender acknowledged the fair
market value because it extended the loan to Plaintiff.35

31

See Doc. 32-10, Ex. A-9
Acknowledgment of Fair Market Value.

to

Def.’s

Am.

Mot.

for

Summ.

J.,

32

See Doc. 34, Pl.’s Resp. to Def.’s Mot. for Summ. J. p. 7.

33

See id.

34

See Doc. 36, Def.’s Resp. to Pl.’s Mot. for Final Summ. J. p. 5.

35

Id.

15

The Texas Constitution states that a homestead is protected
from a forced sale except when an extension of credit made where
“the

owner

of

the

homestead

and

the

lender

sign

a

written

acknowledgment as to the fair market value” of the property.
Tex. Const. Art. XVI § 50(a)(6)(Q)(ix).
confuse

an

acknowledgment

of

fair

Plaintiff appears to

market

value

with

an

acknowledgment of a written instrument; Defendant is correct that
there is no requirement that the agreement be notarized.

See

id.; see also In re Ortegon, 398 B.R. 431, 439-40 (Bankr. W.D.
Tex.

2008)

(holding

that

the

statute

“does

not

require

the

acknowledgment to be in the form of an affidavit”).
However, the court is not convinced by Defendant’s argument
that an unsigned line identifying the lender functions as a
signature.
that

“Texas

Defendant relies on the Fifth Circuit’s statement
recognizes

typed

or

stamped

signatures–

and

presumably also scanned signature– so long as they are rendered
by or at the discretion of the signer.”

Reinagel v. Deutsche

Bank Nat’l Trust Co., 735 F.3d 220, 227 (5th Cir. 2013).

A

signature generally requires some mark or sign showing an intent
to be bound by the document.

See Tex. Bus. Orgs. Code Ann. §

1.002(82) (“Signature means any symbol executed or adopted by a
person with present intention to authenticate a writing”).
16

Here,

Defendant

does

authenticate

a

not

present

writing

in

any

the

evidence

of

acknowledgment

of

intention
fair

to

market

value.
Section 50 of Article XVI of the Texas Constitution provides
that if there is a violation of a term within the section, a
lender can cure the defect by delivering the required documents
or obtaining appropriate signatures within sixty days of being
notified

of

such

50(a)(6)(Q)(x)(d).

violation.

See

Tex.

Const.

Art.

XVI

§

A lender who complies with this provision is

considered to have timely cured the alleged violation.

See Tex.

Admin. Code § 153.95 (2004).
It is undisputed that Plaintiff provided notice to Defendant
via Plaintiff’s December 11, 2013 notice of a request to cure.36
Plaintiff argues that Defendant had until February 9, 2014, to
cure any defects, but failed to take “any corrective measures.”37
However, Defendant provided evidence that on December 23, 2013,
and again on February 7, 2014, it produced documents requested by
Plaintiff,

including

an

acknowledgment

of

fair

market

signed by both Plaintiff and lender’s representative.38

value

Thus, if

36

See Doc. 1-3, Ex. 3 to Doc. 1, Not. of Removal, Pl.’s Original Pet.
p. 3; Doc. 32-6, Ex. A-5 to Doc. 32, Def.’s Am. Mot. for Summ. J., Notice of
Request to Cure.
37

See Doc. 33, Pl.’s Mot. for Final Summ. J. p. 11.

38

See Doc. 32-7, Ex. A-6 to Doc. 32, Def.’s Am. Mot. for Summ. J.,
Acknowledgment of Fair Market Value.

17

there had been any violation of the Texas Constitution related to
the acknowledgment of fair market value, there is no genuine
issue of material fact that such violation was corrected before
Plaintiff filed his original petition.
Because Plaintiff cannot raise an issue of material fact
regarding any of his claims, the court GRANTS Defendant’s motion
for summary judgment relating to Plaintiff’s claims arising under
the Texas Constitution.
2.

Declaratory Judgment and Attorney’s Fees

Plaintiff moves for a declaratory judgment voiding the lien
and also seeks attorney’s fees under Chapter 37 of the Texas
Civil Practice and Remedies Code.

Defendant argues that as

Plaintiff has no viable affirmative claims, he is not entitled to
void the lien.

The court agrees.

When a declaratory judgment action is filed in state court
and is later removed to federal court, it is converted to an
action brought under the federal Declaratory Judgment Act.
U.S.C. §§ 2201, 2202.

28

The federal Declaratory Judgment Act is a

procedural device that does not create substantive rights, but
requires the existence of a justiciable controversy.

Bell v.

Bank of Am. Home Loan Serv. LP, Civil Action No. H-11-2085, 2012
WL 568755, *8 (S.D. Tex. 2012) (unpublished).
18

A declaratory

judgment

action

thus

requires

a

controversy between two parties.
358 (5th Cir. 2003).
against

Defendant,

substantial

and

continuing

Bauer v. Texas, 341 F.3d 3582,

Here, as Plaintiff has no viable claims
Plaintiff

cannot

maintain

a

declaratory

judgment action, or obtain attorney’s fees as a prevailing party.
3.

Defendant’s Counterclaim

Finding
material

fact

that

Plaintiff

with

respect

has
to

not
his

presented
claims,

an

the

issue

court

of

next

considers Defendant’s requests for non-judicial foreclosure, a
writ of possession, a declaratory judgment confirming the lien,
and attorney’s fees.39
a.

Non-Judicial Foreclosure

Defendant seeks non-judicial foreclosure pursuant to Article
XVI,

Section

50(a)(6).

Plaintiff

responds

that

Defendant’s

motion should be rejected because: (1) Defendant does not have a
valid lien; (2) this court is an improper forum to bring a
foreclosure claim; and (3) Defendant has not properly accelerated
Plaintiff’s loan.
The court finds there is no genuine dispute that Defendant
has a valid lien.

Defendant has produced evidence that the lien

was assigned to it, and Plaintiff’s Texas Constitution claims

39

Defendant has abandoned its bad faith claim.
Resp. to Pl.’s Mot. for Summ. J., p. 6.

19

See Doc. 36, Def.’s

have been resolved in its favor.40
Plaintiff next argues that this court is an improper forum
based on Huston v. U.S. Bank Nat’l Ass’n, 359 S.W.3d 679 (Tex.
App.– Houston [1st Dist.] 2011, no pet.), which held that an
application

for

proceeding

foreclosure

that

does

ordinary lawsuit.

not

is

part

contemplate

Id. at 682.

of

a

the

special

expedited

procedures

of

an

However, Huston sets out the

three options that a party seeking to foreclose may employ under
either Texas Rule of Civil Procedure 735 or 736: “(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

foreclosure.”
Here,

under

Rule

736

for

an

order

allowing

Id.

Defendant

filed

a

counterclaim

seeking

judgment including an order allowing foreclosure.

a

final

This appears

to be an option permitted by Huston and the court finds that it
is a proper forum to grant the relief requested.

See also

Huston v. U.S. Bank Nat’l Ass’n, 988 F.Supp.2d 732, 740 (S.D.
Tex. 2013) (allowing bank to pursue a counterclaim for an order

40

See Doc. 32-4, Ex. A-3 to Def.’s Am. Mot. for Summ. J., Assignment
of Deed of Trust.

20

of foreclosure).
Finally, Plaintiff alleges that Defendant has not properly
accelerated

the

loan.

In

response,

Defendant

presents

an

affidavit stating that on June 21, 2013, Defendant’s agent mailed
three notices of acceleration to Plaintiff.41

Two notices were

mailed to Lloyd Byrl Billiter, 6734 West Greens Road, Houston,
Texas, 77066, and one notice was mailed to Lloyd Byrl Billiter,
Jr., c/o JLJ Financial & Consulting, LLC, Attn: David Givens,
2061 NW 2nd Ave, Ste. 205, Boca Raton, Fla., 33431.42
Plaintiff avers that he did not receive the latter notice
because it was not addressed to him and, even if he had, it
presented a notice of default for less than the total balance, in
support

of

his

contention

that

the

note

has

not

been

accelerated.43
In order to effect a valid foreclosure, the holder of a note
in default must provide: (1) a notice of intent to accelerate
with

demand

for

payment

and

time

to

cure;

(2)

notice

of

acceleration; and (3) notice of a foreclosure sale at least
twenty-one days before the sale and at least twenty days after

41

See Doc. 32-14, Ex. B to Def.’s Reply to Pl.’s Mot. for Summ. J.,
Aff. of Becky Howell.
42

Id.

43

See Doc. 41-2, Ex. 2 to Pl.’s Surreply to Def.’s Am. Mot. for Summ.
J., Notice of Default Letter dated May 6, 2014.

21

notice of default.

Clark v. FCIC, 849 F. Supp. 2d 736, 742 (S.D.

Tex. 2011); Ogden v. Gibraltar Sav. Ass’n, 640 S.W.2d 232, 233
(Tex. 1982).

Both the notice of intent to accelerate and the

notice of acceleration must be “clear and unequivocal.”

Holy

Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex.
2001).
Under the Texas Property Code § 51.002(e), “service of a
notice under this section by certified mail is complete when the
notice is deposited in the United States mail, postage prepaid
and addressed to the debtor at the debtor’s last known address.”
The court finds there is no dispute of material fact that
Defendant
51.002(e).

mailed

the

letter

to

Plaintiff

as

required

under

Defendant has offered evidence that it mailed three

copies of the notice, including two sent to Plaintiff’s home
address.

Plaintiff disputes only the receipt of the one letter

not addressed to him, not the two that were mailed to his home
address.
that

There is therefore no genuine issue of material fact

Defendant’s

June

21,

2013

letter

constituted

effective

service.
However, in order to effect a valid foreclosure, Defendant
must establish that it has sent both a notice of intent to
accelerate and a notice of acceleration.
22

Clark, 849 F. Supp. 2d

at 742.

The June 21, 2013 letter states that “the holder of the

note has elected to accelerate the maturity of the debt.”44
Defendant

attaches

a

sworn

statement

made

by

an

agent

of

Defendant who serviced Plaintiff’s loan, stating that the letter
was a “notice to accelerate.”45
Despite

this

assertion,

it

is

unclear

from

the

record

whether the June 21, 2013 letter was a notice of intent to
accelerate or a notice of acceleration.

Defendant’s letter is

not identified as a notice of acceleration, does not request the
full unpaid balance of Plaintiff’s loan, and does not provide
twenty

days

to

cure

the

unpaid

balance

in

order

to

avoid

potential foreclosure as stipulated by the Texas Property Code.
See

Tex.

Prop.

Code

§

51.002(d).

Additionally,

a

valid

foreclosure requires both a notice of intent to accelerate and a
notice of acceleration.

In support of its right to foreclose,

Defendant has produced only a notice of default and the June 21,
2013 letter.46
Further, in support of his position that Defendant has not

44

Doc. 32-14, Ex. B-1 to Def.’s Am. Mot. for Summ. J., Letter Dated
June 21, 2013.
45

See Doc. 32-14, Ex. B to Def.’s Am. Mot. for Summ. J., Aff. of Becky

Howell p. 3.
46

See Doc. 32-5, Ex. A-4 to Def.’s Am. Mot. for Summ. J., Notice of
Default Letter dated Sept. 14, 2012; Doc. 32-14, Ex. B-1 to Def.’s Am. Mot. for
Summ. J., Letter dated June 21, 2013.

23

accelerated the note, Plaintiff has produced a letter dated May
6, 2014, that demands a past-due balance of $27,336.04, rather
than the accelerated balance of the loan.47
that

he

has

not

received

a

subsequent

Plaintiff states

acceleration

letter

following the May 6, 2014 notice of default.48
Because Defendant has not produced clear and unequivocal
evidence that it provided both a notice of intent to accelerate
and notice of acceleration, and because Plaintiff has produced
evidence inferring that the loan has not been accelerated, the
court finds that Defendant cannot show that it is entitled to
foreclosure as a matter of law.
c.

Declaratory Judgment and Writ of Possession

Defendant

seeks

a

declaratory

judgment

stating

Plaintiff is entitled to proceed with foreclosure.
also requests a writ of possession.

that

Defendant

Because Defendant has not

established that it is entitled to judgment as a matter of law
with

respect

Defendant’s

to

its

request

foreclosure

for

a

claim,

declaratory

the

judgment

court
and

rejects
writ

of

possession at this time.

47
See Doc. 41-2, Ex. 2 to Pl.’s Surreply to Def.’s Am. Mot. for Summ.
J., Notice of Default Letter dated May 6, 2014.
48

See Doc. 41-1, Ex. 1 to Pl.’s Surreply to Def.’s Am. Mot. for Summ.
J., Aff. of Lloyd Billiter.

24

d.

Attorney’s Fees and Costs

Defendant

seeks

attorney’s

fees

under

Section

38.001

of

Texas Civil Practice and Remedies Code. Plaintiff responds that
Defendant is not entitled to attorney’s fees because home equity
loans are non-recourse and Defendant is thus not entitled to
collect attorney’s fees from Plaintiff.
Under Texas contract law, a party may recover attorney’s
fees when such recovery is provided by statute or by contract.
In re Velazquez, 660 F.3d 893, 895-96 (5th Cir. 2011).

Home

equity loans are non-recourse and preclude contractual mortgagor
liability.

Tex. Const. Art. XVI § 50(a)(6)(C); Huston, 988 F.

Supp. 2d at 741.
liable

for

While the mortgagor may not be held personally

attorney’s

fees,

the

mortgagee

may

recover

its

attorney’s fees, if permitted by contract, against the property
after a foreclosure sale.

Huston, 988 F. Supp. 2d at 741.

Here, Defendant has not established that it is entitled to
judgment as a matter of law regarding foreclosure.

The court

therefore denies Defendant’s claim for attorney’s fees at this
time.
IV.
Based

on

the

Conclusion

foregoing,

Summary Judgment (Doc. 32)

Defendant’s

Amended

Motion

for

is GRANTED in part and DENIED in

part, and Plaintiff’s Motion for Final Summary Judgment (Doc. 33)
25

is DENIED.
Defendant’s counterclaim for non-judicial foreclosure will
be set for trial.

The court may reconsider its motion with

respect to Defendant’s foreclosure claim if Defendant can produce
unequivocal evidence that the requirements of the Texas Property
Code have been met within ten days of receipt of this order.
SIGNED in Houston, Texas, this 17th

day of February, 2015.

______________________________
U.S. MAGISTRATE JUDGE

26