Wheeler v. U.S. Bank National Association, as Trustee for Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2006-NC1
Filing
37
MEMORANDUM OPINION AND ORDER granting 31 MOTION for Summary Judgment, denying 34 Cross MOTION for Summary Judgment and Response to Defendant's Motion for Summary Judgment. (Signed by Judge Sim Lake) Parties notified.(aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
February 10, 2016
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PRISCILLA WHEELER,
§
§
§
§
§
§
Plaintiff,
v.
U.S. BANK NATIONAL ASSOCIATION,
AS TRUSTEE FOR STRUCTURED
ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH
CERTIFICATES, SERIES 2006-NC1,
Defendant.
David J. Bradley, Clerk
CIVIL ACTION NO. H-14-0874
§
§
§
§
§
§
§
MEMORANDUM OPINION AND ORDER
Plaintiff Priscilla Wheeler
U.S.
Bank National Association,
("Plaintiff" or "Wheeler")
sued
as Trustee for Structured Asset
Securities Corporation Mortgage Pass-Through Certificates, Series
2006-NC1
("Defendant"
or
"U.S.
District Court of Harris County,
case to this court. 3
Bank")
1
Texas. 2
in
the
U.S.
269th
Judicial
Bank removed the
Pending before the court are U.S.
Bank's
1
Wells Fargo services the loan.
See infra note 9.
This
opinion refers to U.S. Bank National Association, Wells Fargo, and
counsel for these parties as "Defendant" or "U.S. Bank" when the
actor's identity is immaterial.
2
See
Original
Petition
and
Request
for
Disclosures
("Petition"), Exhibit B1 to Notice of Removal, Docket Entry No. 12.
3
See Notice of Removal, Docket Entry No. 1.
Motion for Summary Judgment
Motion")
(Docket Entry No.
31)
("Defendant's
and Plaintiff's Cross Motion for Summary Judgment and
Response to Defendant's Motion for Summary Judgment (Docket Entry
No.
34)
("Plaintiff's Motion") . 4
For the reasons stated below,
Defendant's Motion will be granted,
Plaintiff's Motion will be
denied, and this action will be dismissed with prejudice.
I.
In November of 2005,
Background
Wheeler executed a
Fixed/Adjustable Rate Note
(the "Note")
Security Instrument (the "Deed of Trust")
in
favor
of
Home123
Corporation,
the
Texas Home Equity
and a Texas Home Equity
(together, the "Loan"),
original
lender. 5
The
property securing the Loan is her homestead located in Houston,
Texas,
in Harris County
(the "Property") . 6
Home123 Corporation
later assigned the Note and Deed of Trust to U.S. Bank. 7
The Note
4
Docket Entries 34 and 35 are identical, so references are to
Docket Entry No. 34.
5
See Note, Exhibit F to Defendant's Motion, Docket Entry No.
31-2, pp. 32-38; Deed of Trust, Exhibit G to Defendant's Motion,
Docket Entry No. 31-2, pp. 40-65. See Affidavit of Alisha Mulder,
a Vice President of Loan Documentation for Wells Fargo, N.A. d/b/a/
America's Servicing Company ("Mulder Affidavit"), Exhibit C to
Defendant's Motion, Docket Entry No. 31-1, p. 18.
6
Lot 56, in Block 5, of Hawthorne Place, Section 1, an
addition in Harris County, Texas (commonly referred to as 513 East
Sunnyside, Houston, Texas, 77076) . See Deed of Trust, Exhibit G to
Defendant's Motion, Docket Entry No. 31-2, p. 42; Affidavit of
Priscilla Wheeler, Exhibit 9 to Plaintiff's Motion, Docket Entry
No. 34-10, p. 2 ~ 2.
7
See Assignment
of
Note
and Deed of
-2-
Trust,
Exhibit I to
(continued ... )
contains
an
acceleration
clause,
which
allows
the
lender
to
accelerate the entire amount of remaining debt in the event of
uncured default, provided that the lender gives proper notice. 8
Wheeler defaulted on her payment obligations, and U.S. Bank
sent default notices to the Property in May, September, November,
and December of 2007. 9
Wheeler failed to cure the default,
and
U.S. Bank sent her a notice of acceleration on October 15, 2008,
through its foreclosure counsel. 10
filed
a
Rule
foreclosure.
11
736
application
See Tex. R. Civ.
In January of 2009, U.S. Bank
for
P.
expedited
736.1.
(non-judicial)
In February of 2009,
Wheeler sent a letter to U.S. Bank asking it to modify her mortgage
7
( • • • continued)
Defendant's Motion, Docket Entry No. 31-2, p. 95.
See Note, Exhibit F to Defendant's Motion, Docket Entry No.
31-2, p. 34 ~ 7(c).
The Deed of Trust also allows the lender to
accelerate the debt if the borrower transfers any legal or
beneficial ownership in the Property. See Exhibit G to Defendant's
Motion, Docket Entry No. 31-2, p. 50 ~ 17.
8
9
May 21, 2007, Notice of Default, September 10, 2007, Notice
of Default, November 12, 2007, Notice of Default, December 31,
2007, Notice of Default ( "2007 Default Notices"), Exhibit 1 to
Plaintiff's Motion, Docket Entry No. 34-2. Wells Fargo Bank, N.A.,
doing business as America's Servicing Co., sent the notices in its
capacity as loan servicer.
See Mulder Affidavit, Exhibit C to
Defendant's Motion, Docket Entry No. 31-1, p. 18.
10
See Notice of Acceleration from Brice, Vander Linden &
Wernick, P.C. to Priscilla Wheeler, Exhibit 2 to Plaintiff's
Motion, Docket Entry No. 34-3.
11
In re: Order for Foreclosure Concerning 513 East Sunnyside
Street, Cause No. 2009-04308, 152nd Judicial District, Harris
County Foreclosure Application. Wheeler provides this citation but
has not provided a copy of the application.
-3-
payments rather than foreclosing.
12
obtained an order authorizing it
In May of
to serve a
2009,
U.S.
Bank
notice of sale on
Wheeler and then to proceed with foreclosure on the Property. 13
U.S. Bank did not go through with a foreclosure sale.
On December 3, 2009, U.S. Bank sent Wheeler another notice of
acceleration. 14
In January of 2010, U.S. Bank filed another Rule
736 application for expedited foreclosure.
Bank
obtained
Property . 16
another
order
allowing
15
it
In June of 2010, U.S.
to
foreclose
on
Wheeler filed for bankruptcy in October of 2010. 17
the
U.S.
Bank subsequently accepted several payments towards the balance of
12
See February 10, 2009, Letter from Priscilla Wheeler Re: Loan
# [redacted], Exhibit K to Defendant's Motion, Docket Entry No. 312, p. 101.
13
See Order Allowing Foreclosure in Cause No. 2009-04308 in the
152nd Judicial District of Harris County, Texas, dated May 1, 2009,
Exhibit 3 to Plaintiff's Motion, Docket Entry No. 34-4.
14
See December 3, 2009, Notice of Acceleration, Exhibit 4 to
Plaintiff's Motion, Docket Entry No. 34-5.
The summary judgment
record does not include a preceding notice of default and intent to
accelerate, aside from the 2007 Default Notices. See Exhibit 1 to
Plaintiff's Motion, Docket Entry No. 34-2.
15
See In Re: Order for Foreclosure Concerning 513 East
Sunnyside Street, Cause No. 2010-02009, 234th Judicial District,
Harris County Foreclosure Application.
Wheeler did not attach a
copy of the application.
16
See Order Allowing Foreclosure in Cause No. 2010-02009 in the
152nd Judicial District of Harris County, Texas, dated June 25,
2010, Exhibit 5 to Plaintiff's Motion, Docket Entry No. 34-6.
17
See In re: Priscilla Marie
(Bankr. S.D. Tex. Oct. 4, 2010).
-4-
Wheeler,
Cause
No.
10-38795
the Loan. 18
Wheeler asserts that these payments were made by the
bankruptcy trustee during the automatic stay period. 19
The bankruptcy court dismissed Wheeler's bankruptcy in June of
2011. 20
U.S. Bank sent Wheeler another notice of default and intent
to accelerate in July of 2011. 21
On October 3, 2011, U.S. Bank sent
the last notice of acceleration that preceded this litigation. 22
U.S.
Bank
filed
a
third
Rule
foreclosure in April of 2013. 23
736
application
for
expedited
Wheeler brought this action on
18
The parties submitted two different loan payment histories.
U.S. Bank alleges that Wheeler has not made any payments since May
4, 2011.
See Defendant's Motion, Docket Entry No. 31, p. 6
(listing payments made on December 7, 2010, February 3, 2011, and
May 4, 2011).
U.S. Bank provided an excerpt of fifteen pages of
loan documents with no labels or pinci tes.
See Loan History,
Exhibit D to Defendant's Motion, Docket Entry No. 31-2, pp. 2-16.
Wheeler provided a "Customer Account Activity Statement" from
America's Servicing Company. See Exhibit 6 to Plaintiff's Motion,
Docket Entry No. 34-7, p. 7. This document shows payments received
on the dates listed in Defendant's Motion and an additional payment
on June 7, 2011.
19
See Plaintiff's Motion, Docket Entry No. 34, p. 4
~
13.
20
See Order Dismissing Case and Establishing Deadline for
Filing Administrative Claims, June 13, 2011, Bankr. Docket Entry
No. 50, In re: Priscilla Marie Wheeler, Cause No. 10-38795 (Bankr.
S.D. Tex. Oct. 4, 2010).
21
See Notice of Default and Intention to Accelerate dated July
12, 2011 ("2011 Notice of Default"), Exhibit A to Defendant's
Motion, Docket Entry No. 31-1, p. 2.
22
See Notice of Acceleration ( "2011 Notice of Acceleration"),
Exhibit B to Defendant's Motion, Docket Entry No. 31-1, p. 8;
Affidavit of Michael Burns, Exhibit E to Defendant's Motion, Docket
Entry No. 32-2, pp. 18-19.
23
See In re: Order for Foreclosure Concerning 513 East
Sunnyside Street, Cause No. 2013-23466, 295th Judicial District,
Harris County Foreclosure Application.
Wheeler did not attach a
copy of the application.
-5-
February 26, 2014. 24
seeking
a
judgment
After removal, U.S. Bank filed a counterclaim
for
judicial
foreclosure,
and,
in
the
alternative, a court order authorizing non-judicial foreclosure.
Wheeler filed an answer and an amended complaint. 26
25
Wheeler seeks
to remove a cloud on the Property and to quiet title in her name,
and asks the court to issue a declaratory judgment that U.S. Bank
is barred from foreclosing by the four-year statute of limitations
in Texas Civil Practice and Remedies Code
II.
16.035. 27
§
Standard of Review
Summary judgment is appropriate if the movant establishes that
there is no genuine dispute about any material fact and the movant
is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a).
Disputes about material facts are genuine "if the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party."
Anderson v. Liberty Lobby,
Inc.,
106 S.
Ct.
2505,
2510
24
See Petition, Exhibit B-1 to Notice of Removal, Docket Entry
No. 1-2, p. 13.
Tex. R. Civ. P. 736.11(a) provides that "[a]
proceeding or order under this rule is automatically stayed if a
respondent files a separate, original proceeding in a court of
competent jurisdiction that puts in issue any matter related to the
origination, servicing, or enforcement of the loan agreement,
contract, or lien sought to be foreclosed .
" Therefore, the
April 2013 foreclosure application was automatically stayed.
25
p. 4
See Defendant's Original Counterclaim, Docket Entry No. 12,
~~
8-11.
26
See Plaintiff's Answer to Defendant's Original Counterclaim
("Plaintiff's Answer") , Docket Entry No. 13; Plaintiff's First
Amended Complaint ("Amended Complaint"), Docket Entry No. 20.
27
See Amended Complaint, Docket Entry No. 20, pp. 3-5
-6-
~~
16-26.
(1986).
The moving party is entitled to judgment as a matter of
law if "the nonmoving party has failed to make a sufficient showing
on an essential element of her case with respect to which she has
the burden of proof."
Celotex Corp. v. Catrett, 106 S. Ct. 2548,
2552 (1986).
A party moving for summary judgment "must
'demonstrate the
absence of a genuine issue of material fact,' but need not negate
the elements of the nonmovant's case."
37 F.3d 1069, 1075 (5th Cir. 1994)
Celotex, 106 S. Ct. at 2553).
Little v. Liquid Air Corp.,
(en bane)
(per curiam)
(quoting
"If the moving party fails to meet
this initial burden, the motion must be denied, regardless of the
nonmovant's response."
this burden,
Id.
If, however,
the moving party meets
"the nonmovant must go beyond the pleadings"
and
produce evidence of specific facts demonstrating there is a genuine
issue for trial.
Id.
nonmovant
do
"must
(citing Celotex, 106 S. Ct. at 2553-54).
more
than
simply
show
that
metaphysical doubt as to the material facts."
there
is
The
some
Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 106 S. Ct. 1348, 1356 (1986).
"In
order
to
avoid
summary
judgment,
the
nonmovant
must
identify specific facts within the record that demonstrate the
existence of a genuine issue of material fact."
Min. Co., L.P., 565 F.3d 268, 273 (5th Cir. 2009)
also
articulate
the
precise
manner
in which
identified evidence supports his or her claim."
quotation marks and citation omitted) .
CQ,
Inc. v. TXU
"The party must
the
submitted or
(internal
"When evidence exists in
the summary judgment record but the nonmovant fails even to refer
-7-
to it in the response to the motion for summary judgment,
evidence is not properly before the district court."
Id.
that
(same).
In reviewing the evidence "the court must draw all reasonable
inferences in favor of the nonmoving party,
credibility determinations
or weigh
the
and it may not make
evidence."
Reeves
Sanderson Plumbing Prods., Inc., 120 S. Ct. 2097, 2110 (2000).
v.
The
court resolves factual controversies in favor of the nonmovant,
"but only when there is an actual controversy, that is, when both
parties have submitted evidence of contradictory facts."
Little,
37 F.3d at 1075.
III.
Analysis
Wheeler's Motion focuses on her claim that U.S. Bank is barred
from foreclosing because the statute of limitations has expired,
while U.S. Bank argues that the statute of limitations ceased to
run because
it
abandoned earlier accelerations.
Wheeler also
briefly argues that there is a fact issue as to her affirmative
defense:
that
the
lien is
invalid because U.S.
Bank failed to
comply with the requirements of the Texas Constitution. 28
This
argument will be addressed first.
A.
Validity of the Mortgage
Wheeler's second affirmative defense alleges that the lien is
invalid for failure to comply with Texas Constitution Article XVI,
28
See Plaintiff's Motion, Docket Entry No. 34, p. 13
Plaintiff's Answer, Docket Entry No. 13, p. 3.
-8-
~~
46-48;
§
50(a) (6) (Q) (v) because Wheeler "was not provided with a copy of
all executed documents signed by her at closing. " 29
See Tex. Canst.
art. XVI
or of a single
50 (a) (6)
§
("The homestead of a family,
adult person, shall be, and is hereby protected from forced sale,
for the payment of all debts except for
credit that
.
an extension of
[is made on certain enumerated conditions.]").
U.S.
Bank responds that even if there were constitutional infirmities at
origination, the four-year statute of limitations has since expired
and the lien is now valid as a matter of law. 30
The
Fifth
Circuit
recently
addressed
the
limitations under the Texas Constitution Article XVI,
statute
§
of
50(a) (6).
See Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667 (5th Cir.
2013) .
In
Priester,
violated
two
the
provisions
5 0 ( a) ( 6 ) (M) ( I ) and
§
of
plaintiffs
Texas
5 0 ( a) ( 6 ) ( N) .
alleged
Constitution
Id.
at 671.
that
defendants
Article
XVI:
§
The defendants
argued that the plaintiffs' claims were barred by limitations, even
though there is no express limitations period for claims under
50(a)(6).
Id.
at
672.
The
Fifth Circuit
concluded that
§
the
See Plaintiff's Motion, Docket Entry No. 34, p. 13 ~~ 46-48;
Plaintiff's Answer, Docket Entry No. 13, p. 3 ("All conditions
precedent have not been performed nor occurred.
Specifically,
Defendant failed to comply with all requirements of Texas
Constitution Article XVI, §§ 50 (a) (6) (M) (I) & 50 (a) (6) (Q) (v) .").
29
30
See Defendant's Response to Plaintiff's Cross-Motion for
Summary Judgment and Reply to Plaintiff's Response to Defendant's
Motion for Summary Judgment ("Defendant's Response"), Docket Entry
No. 36, pp. 2-4.
-9-
residual
statute
Remedies Code
§
50(a) (6) ."
§
of
limitations
in
Texas
Civil
Practice
and
16.051 "applies to constitutional infirmities under
Id. at 673-74. 31
The "discovery rule" does not apply,
and limitations begins to run when the parties create the lien.
Id. at 675-76.
Under this authority, Wheeler had four years from November 17,
2005, in which to challenge the validity of U.S. Bank's lien based
on
failure
to
comply
with
Tex.
Const.
art.
XVI,
§
50 (a) ( 6) .
Wheeler's first challenge came in October of 2014, nearly ten years
later,
32
and is barred by limitations. 33
31
The Fifth Circuit noted that, although the Texas Supreme
Court has not addressed the issue, the two Texas courts of appeals
that have addressed the issue found that the residual statute
applies.
Id. (citing Rivera v. Countrywide Home Loans, Inc., 262
S.W.3d 834, 839 (Tex. App.-Dallas 2008, no pet.), and Schanzle v.
JPMC Specialty Mortg. LLC, No. 03-09-00639-CV, 2011 WL 832170, at
*4 (Tex. App.-Austin Mar. 11, 2011, no pet.)).
The court also
noted that Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342 (Tex.
2001), suggests that "the Texas Supreme Court considers liens
created in violation of Section 50(a) (6) to be voidable rather than
void . . . . " Id. See also Priester, 708 F.3d at 674 ("In Boutari
v. JP Morgan Chase Bank N.A., 429 F. App'x 407 (5th Cir. 2011) (per
curiam), however, we affirmed a judgment that limitations applies
to claims under Section 50(a) (6).
In a two-sentence opinion, we
said that we had 'determined that the judgment of the district
court should be affirmed for essentially the reasons set forth by
the district court.' Id. The opinion we affirmed had applied the
four-year statute of limitations.
See Boutari v. JP Morgan Chase
Bank, N.A., 2010 U.S. Dist. LEXIS 144094 (W.D. Tex. June 10,
2010) . If) •
32
See Plaintiff's Answer, Docket Entry No. 13, p. 3.
33
See also Jones v. The Bank of New York Mellon, No. H-13-2414,
2015 WL 300495 (S.D. Tex. Jan. 22, 2015).
The plaintiff claimed
multiple constitutional violations under art. XVI, § 50 (a) (6),
(continued ... )
-10-
B.
Abandonment
When a mortgage or deed of trust containing a power of sale
creates a lien on real property, Texas law requires that the lender
foreclose no later than four years after the day the cause of
action accrues.
See Tex.
Civ.
Prac.
& Rem.
Holy Cross Church of God in Christ v.
(Tex. 2001)
Wolf,
Code Ann.
§ 16.035;
44 S.W.3d 562,
567
Once the four-year limitations period expires,
the
real-property lien and the power of sale to enforce the lien become
void.
Holy Cross, at 567;
16.035(d)).
the
(citing Tex. Civ. Prac. & Rem. Code §
The borrower's default does not automatically trigger
limitations
period
where
election of the note holder.
acceleration
is
optional
at
Holy Cross, 44 S.W.3d at 566.
the
The
foreclosure cause of action accrues only when the holder actually
exercises its acceleration option.
Inc., 371 S.W.3d 347, 353
pet.)
Id.; Khan v. GBAK Properties,
(Tex. App.-Houston [1st Dist.]
2012, no
("If a note secured by a real property lien is accelerated
pursuant to the terms of the note, then the date of accrual becomes
the date the note was accelerated.") .
33
"Effective acceleration
( • • • continued)
including that he did not receive final copies of the loan
documents as required by§ 50(a) (6) (Q) (v).
Id. at *3.
The court
held that Texas's residual four-year statute of limitations
applied. Id. at *4-5. "Priester controls and binds this Court to
conclude that even if the lien were defective (and the Court
concludes it was not) when Jones' mortgage was created on June 4,
2003, it became valid as a matter of law when the four-year statute
of limitations expired on June 4, 2007 and that [the bank] has the
right to foreclose on the Property." Id. at *6-7.
-11-
requires
two acts:
( 1)
notice of
notice of acceleration."
intent to accelerate and
Holy Cross,
44 S.W.3d at 566.
notices must be 'clear and unequivocal.'"
Under
Texas
law
the
agreement or actions.
parties
Khan,
can
( 2)
"Both
Id.
abandon
acceleration
371 S.W.3d at 356; Clawson v.
by
GMAC
Mortgage, LLC, No. 3:12-CV-00212, 2013 WL 1948128, at *3 (S.D. Tex.
May 9, 2013).
A lender can unilaterally abandon an acceleration.
Leonard v. Ocwen Loan Servicing, L.L.C., 616 F. App'x 677, 680 (5th
Cir. 2015)
("Leonard II"); Clawson, 2013 WL 1948128, at *4.
For
example,
" [e] ven when a noteholder has accelerated a note upon
default,
the
holder
can
to
accept
payments
continues
abandon
acceleration
without
available to it upon declared maturity."
if
exacting
the
any
holder
remedies
Holy Cross, 44 S.W.3d at
566-67; see also Rivera v. Bank of America, N.A., 607 F. App'x 358,
360-61
(5th Cir.
2015).
Statements by either party about
the
loan's acceleration status can also be "other actions" considered
by courts to determine abandonment.
(Bankr. W.D. Tex. 2014)
Filing a
abandonment.
In re Rosas, 520 B.R. 534, 539
(citing Khan, 371 S.W.3d at 355).
unilateral
notice
However,
of
rescission
because
will
parties
constitute
may
abandon
acceleration through their actions alone, there is no requirement
in Texas that any agreement to abandon acceleration must be in
writing or that it is subject to the Statute of Frauds.
v.
U.S.
Bank National Association,
-12-
No.
01-14-00017-CV,
Biedryck
2015 WL
2228447,
at *5
(Tex.
App.-Houston
[1st Dist.]
520 B.R. at 539
May 12,
no
pet.);
In re Rosas,
356).
Sending account statements requesting less than the full
balance
of
the
accelerated
Leonard
II,
616
F.
App ' x
loan
at
(citing Khan,
2015,
can
371 S.W.3d at
constitute
abandonment.
A lender may also abandon
68 0 .
acceleration by sending new default notices and notices of intent
to accelerate.
See Leonard v. Ocwen Loan Servicing, Inc., 2014 WL
4161769, at *4-5
Leonard
II,
Association,
Oct.
29,
(S.D. Tex. Aug. 19, 2014)
616
No.
2014)
("Boren II").
F.
App'x
H-13-2160,
("Boren I"),
677;
*4
Khan,
1948128, at *3)
must
U.S.
aff'd,
Bank
at *1-2
807 F.3d 99
National
(S.D.
(5th Cir.
Tex.
2015)
Abandonment "resets" the statute of limitations for
(citing
longer
v.
2014 WL 5486100,
the foreclosure cause of action.
at
Boren
("Leonard I"), aff'd,
371
maturity date.
S. W. 3d at
353,
and
Clawson,
2013
WL
(Once "a noteholder abandons acceleration, he no
foreclose
acceleration.").
See Leonard I, 2014 WL 4161769,
within
four
years
from
the
date
of
Abandonment restores the loan to its original
See id.
Wheeler argues that "the clock on Defendant's right to bring
suit or make a sale [as required by Tex. Civ. Prac. & Rem. Code
16.035]
began
ticking
on
October
15,
unequivocally accelerated the Loan. 34
Remedies Code
34
§
2008,"
when
§
Defendant
Texas Civil Practice and
16.035 states (in part)
See Plaintiff's Motion, Docket Entry No. 34, p. 7
-13-
~~
25-27.
(a) A person must bring suit for the recovery of real
property under a real property lien or the foreclosure of
a real property lien not later than four years after the
day the cause of action accrues.
(b) 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.
Wheeler argues that U.S. Bank's power to foreclose on the Property
expired on October 15, 2012, because U.S. Bank never abandoned the
2008 Acceleration.
35
Wheeler advances the same argument regarding
the "purported 2009 Acceleration." 36
U.S.
Bank argues that the
parties' conduct establishes abandonment of the 2008 Acceleration. 37
Specifically, U.S. Bank:
(1) accepted payments from Plaintiff;
(2)
demanded less than the fully matured and accelerated balance of the
Mortgage; and (3) re-accelerated the Mortgage. 38
The
summary
judgment
evidence
shows
that
after
the
2008
Acceleration, U.S. Bank accepted payments that were less than the
full amount due on the Note without exacting remedies available to
See id. at 7-12 ~~ 27-40.
Wheeler argues that Rule 736
applications are not "suits to foreclose" because they are nonjudicial proceedings.
Id. at ~~ 29-30.
U.S. Bank does not argue
that it filed suit to foreclose within four years of October 15,
2008, but that it abandoned the acceleration by subsequent conduct.
See Defendant's Motion, Docket Entry No. 31, p. 10; Defendant's
Response, Docket Entry No. 36, pp. 1-2.
35
See Plaintiff's Motion, Docket Entry No. 34, pp. 12-13 ~~
41-4 5.
The discussion regarding abandonment, infra, applies
equally to this "purported 2009 acceleration."
36
37
See Defendant's Motion, Docket Entry No. 31, p. 10.
38
See id. at 2-3.
-14-
it upon declared maturity. 39
Holy Cross,
This demonstrates abandonment.
44 S.W.3d at 566;
Rivera,
607
F.
App'x at 360-61;
Snowden, No. H-14-2963, 2015 WL 5123436, at *2-3
31,
2015);
Clawson,
2013
WL
1948128,
at
abandonment.
(S.D. Tex. Aug.
*3-4.
subsequent communications with Wheeler are
See
U.S.
Bank's
further evidence of
The 2011 Default Notice demands that Wheeler cure her
default. 40
It demands less than the entire accelerated balance of
the
indicating
Note,
that
U.S.
Bank was
collect the full amount due on the Note. 41
no
longer seeking
to
When Wheeler failed to
cure the default, U.S. Bank sent the 2011 Notice of Acceleration,
demanding the full amount due on the Note and re-accelerating the
Loan. 42
See Cline v. Deutsche Bank National Trust Co.,
1565-D,
2015
WL
4041791,
at
*5
(acceleration can be abandoned by
(N.D.
Tex.
"seeking less
July
3:14-CV2,
2015)
than the
full
accelerated amount and mailing new notice-of-intent-to-accelerate
39
See Loan History, Exhibit D to Defendant's Motion, Docket
Entry No. 31-2, pp. 2-16; Customer Account Activity Statement,
Exhibit 6 to Plaintiff's Motion, Docket Entry No. 34-7.
40
See 2011 Notice of Default, Exhibit A to Defendant's
Docket Entry No. 31-1, p. 2 ("If the default is not cured
payment within thirty (30) days of the date of this notice,
further notice or demand, the maturity date of the Note
accelerated and all sums secured by the Deed of Trust
declared to be immediately due and payable.").
41
See id.
$49,224,32.").
(" [T] he
amount
required
42
to
cure
the
Motion,
by such
without
will be
will be
default
is
2011 Notice of Acceleration, Exhibit B to Defendant's Motion,
Docket Entry No. 31-1, p. 8.
-15-
letters."); see also Leonard I, 2014 WL 4161769, at *4-5; Boren I,
2 0 14 WL 54 8 61 0 0 ,
at
* 1- 2 .
U.S.
Bank thus
abandoned the
2008
Acceleration by its subsequent actions.
Citing Thompson v. Chrysler First Business Credit Corp., 840
S.W.2d 25 (Tex. App.-Dallas 1992, no writ), Wheeler argues that the
payments were made by the bankruptcy trustee, and that "[p]ayments
accepted in bankruptcy pursuant to compliance with the automatic
stay do not
equate
abandonment. " 43
to waiver of
defendant accelerated the plaintiff's
defaulted,
and
the
plaintiff
foreclosure by defendant.
plaintiff
argued
that
because
loan after the plaintiff
filed
Id. at 27.
the
The Thompson
bankruptcy
to
prevent
In the subsequent suit, the
defendant
accepted payments
pursuant to an adequate protection agreement during bankruptcy, it
"waived the acceleration and created a duty to re-demand and reId.
accelerate" before foreclosing.
Fargo Bank,
App.-Houston
N.A.,
[1st
01-12-00945-CV,
Dist.]
Dec.
30,
at 30.
In Hardy v.
2014 WL 7473762,
2014,
no
pet.),
Wells
at *5
(Tex.
the
court
discussed Thompson's holding:
Thompson stands for the proposition that when a federal
bankruptcy court issues an order of adequate protection
pursuant to which the parties enter into a repayment
agreement, and the lender accepts payments made pursuant
thereto, such payments do not establish that the lender
abandoned the acceleration of the Note for purposes of
See Plaintiff's Motion, Docket Entry No. 34, p. 11 ~ 35.
Presumably Wheeler intended to say "waiver of acceleration," or
this statement bolsters U.S. Banks's position.
43
-16-
summary judgment.
Thompson, 840 S.W.2d at 30-318; see
also Khan, 371 S.W.3d at 354 (discussing Thompson).
Wheeler has not pointed to any evidence in the summary judgment
record that the bankruptcy trustee made these payments or that they
were made pursuant to an "adequate protection" agreement. 44
is not
the
function of
the court
"[I]t
to search the record on the
nonmovant's behalf for evidence which may raise a fact issue."
Stewart v. U.S. Bank National Association,
707-08 (S. D. Tex. 2015)
107 F.
Supp.
See
3d 705,
(citing Topalian v. Ehrman, 954 F.2d 1125,
1137 n. 30 (5th Cir. 1992)).
U.S. Bank also sent another default
notice and notice of intent to accelerate after the bankruptcy
court dismissed Wheeler's bankruptcy action. 45
that U.S. Bank abandoned the 2008 Acceleration.
These actions show
See Boren II, 807
F.3d at 104-06.
Wheeler also argues that U.S. Bank "should have vacated both
orders
[granting its request for non-judicial foreclosure under
Tex. R. Civ. P. 736] if in fact it did intend to abandon the prior
acceleration ( s)
of the loan and indicate to Plaintiff that the
default was obviated and the contract restored to its original
44
The Customer Account Activity Statement does not say who made
the payments.
See Exhibit 6 to Plaintiff's Motion, Docket Entry
No. 34-7.
In fact, there is a column for "Debtor Funds Received"
and a column for "Trustee Funds Received." The payments referred
to are all in the "Debtor Funds Received" column.
45
See Order Dismissing Case and Establishing Deadline
Filing Administrative Claims, supra note 20.
-17-
for
condition
If
46
However,
Rule 736 is merely a procedural
device used to obtain authorization to proceed with the remedy of
foreclosure.
WL 5123436,
Biedryck, 2015 WL 2228447, at *5.
at *3,
In Snowden, 2015
the court rejected a similar argument.
The
plaintiff argued that because the defendants obtained an "Order
Allowing Foreclosure under Texas Rule of Civil Procedure 736," the
defendants could not abandon the acceleration.
characterized the
Id.
The plaintiff
defendant's actions in obtaining the order as
"remedies that could only have been 'exacted' upon maturity of the
loan."
Id.
The court found that this argument had been rejected
by the Houston First Court of Appeals.
Id.
(citing Biedryck, 2015
WL 2228447, at *5).
"A lender may abandon acceleration even after
obtaining
allowing
an
order
for
foreclosure
by,
for
example,
accepting payments or entering into a loan modification agreement
with the borrower."
Id.
See also Deutsche Bank National Trust Co.
v. Ra Surasak Ketmayura, No. A-14-CV-00931-LY-ML, 2015 WL 3899050,
at *7 (W.D. Tex. June 11, 2015)
(citing Biedryck, 2015 WL 2228447).
Therefore, U.S. Bank was not required to ask the court to vacate
its Rule 736 orders in order to abandon acceleration.
Texas Civil Practice and Remedies Code
§
16. 03 5 gives the
lienholder four years after the cause of action accrues to:
( 1)
bring suit or foreclose on its real property lieni and (2) sell the
46
11-12
See Plaintiff's Motion, Docket Entry No. 34, p. 12
36-40.
~~
-18-
~ 38i
pp.
property under its power of sale.
Wheeler argues that the power of
sale pursuant to any of the purported accelerations has expired
Bank has not brought suit and sold the Property. 47
because U.S.
Wheeler brought this action on February 26, 2014, thereby staying
Defendant's
foreclosure.
pending
48
Rule
736
application
for
See Tex. R. Civ. Proc. 736.11(a).
non-judicial
Wheeler argues
that a Rule 736 application for expedited foreclosure is a nonjudicial proceeding, and does not satisfy the first requirement of
"bringing suit." 49
However, U.S. Bank satisfied this requirement
by filing a counterclaim for judicial foreclosure on October 2,
2014.
It filed the counterclaim within the four-year statute of
limitations, which began running after the 2011 Acceleration. 50
Boren II, 807 F.3d at 103-04.
See
The statute of limitations for U.S.
Bank to exercise its rights has therefore not expired. 51
47
See id. at 9-10
~~
30-32; 12-13
~~
41-43.
48
See Petition, Exhibit B-1 to Notice of Removal, Docket Entry
No. 1-2, p. 13.
~
49
See Plaintiff's Motion, Docket Entry No. 34, p. 8
50
See Defendant's Original Counterclaim, Docket Entry No. 12.
51
29.
Wheeler also argues that the power of sale has expired even
based on the 2011 Acceleration because U.S. Bank did not sell the
Property by October 3, 2015. See Plaintiff's Motion, Docket Entry
No. 34, p. 13 ~ 43 (citing Tex. Civ. Prac. & Rem. Code §
16.035(b)).
U.S. Bank needs a court order to sell the Property,
and this action stayed its Rule 736 applications and orders and
prevented it from exercising its power of sale.
See Tex. Const.
art. XVI, § SO(a) (6) (D) (a home equity loan may be foreclosed upon
only by court order).
"[A]s a general rule, where a person is
(continued ... )
-19-
C.
Judicial Foreclosure
To foreclose under a security instrument with a power of sale,
Texas
law requires
existsi
§
the
lender to demonstrate
that:
(1)
a
debt
(2) the debt is secured by a lien created under Art. XVI,
50 (a) (6) of the Texas Constitutioni
(3) plaintiff is in default
under the note and security instrumenti and (4) plaintiff received
notice
of
default
and acceleration.
National Association,
See
988 F. Supp. 2d 732,
Huston v.
740
U.S.
Bank
(S.D. Tex. 2013),
aff'd, 583 F. App'x 306 (Mem)
(5th Cir. 2014), cert. denied, 135 S.
Ct.
Code Ann.
1718
( 2 015)
i
Tex.
Prop.
summary judgment record,
§
51 . 0 0 2 .
Based on the
as discussed in Section I,
supra,
the
court concludes that these elements have been satisfied and that
summary judgment is appropriate for U.S. Bank on its counterclaim
for judicial foreclosure.
IV.
52
Conclusions and Order
For the reasons explained above,
summary judgment for U.S.
Bank is appropriate because there is no genuine issue of material
51
( • • • continued)
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." Jackson v. Johnson, 950 F.2d 263, 265 (5th Cir.
1992) i cf. Ketmayura, 2015 WL 3899050, at *8-9 (finding that "a
suit for an injunction against nonjudicial foreclosure does not
toll the statute of limitations, because it is no impediment to the
lender's ability to sue on the note or seek judicial foreclosure of
the property").
52
p. 4
~
See Defendant's Original Counterclaim, Docket Entry No. 12,
8i Defendant's Motion, Docket Entry No. 31, pp. 12-14.
-20-
fact
regarding
whether
the
statute
foreclosure claim has expired. 53
for
Summary
Plaintiff's
Judgment
Cross
(Docket
Motion
for
of
limitations
for
its
Accordingly, Defendant's Motion
Entry
No.
31)
Summary Judgment
Defendant's Motion for Summary Judgment
is
GRANTED,
and
and Response
to
(Docket Entry No. 34)
is
DENIED.
SIGNED at Houston, Texas, on this lOth day of February, 2016.
SIM LAKE
UNITED STATES DISTRICT JUDGE
53
Wheeler seeks a declaratory judgment. See Amended Complaint,
Docket Entry No. 20, p. 5. Wheeler's arguments rely on her statute
of limitations claim.
"Both Texas and federal law require the
existence of a justiciable case or controversy in order to grant
declaratory relief." Val-Com Acquisitions Trust v. CitiMortgage,
Inc., 421 F. App'x 398, 400 (5th Cir. 2011) (citing Bonham State
Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995)); see also Conrad
v. SIB Mortg. Corp., No. 4:14-CV-915-A, 2015 WL 1026159, at *7
{N.D. Tex. March 6, 2015) {"A declaratory judgment action requires
the parties to litigate some underlying claim or cause of
action."); Elekes v. Wells Fargo Bank, N.A., No. 5:13-CV-89, 2014
WL 2700686 {S.D. Tex. June 11, 2014) {"Declaratory judgment is
merely a form of relief that the Court may grant; it is not a
substantive cause of action."). Because Plaintiff's claims will be
dismissed, her request for declaratory relief has no merit.
Wheeler also argues she is "entitled to quiet title because
expiration of the four-year statute of limitations renders
Defendant's purported lien void." Plaintiff's Motion, Docket Entry
No. 34, p. 6 ~ 24. Because the court holds today that the statute
of limitations has not expired, this claim likewise has no merit.
-21-
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