Justice v. Wells Fargo Bank, National Association, as Trustee for Certificateholders of Bear Stearns Asset Backed Securities I, LLC, Series 2007-AC-2 et al

Filing 24

MEMORANDUM OPINION AND ORDER granting 14 MOTION for Summary Judgment, denying 15 MOTION for Summary Judgment, granting 21 Request in the Alternative for Leave to File Responsive Sur-Sur-Reply. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
BRIAN W. JUSTICE,
Plaintiff,
v.

WELLS FARGO BANK, N.A., AS
TRUSTEE FOR THE REGISTERED
HOLDERS OF BEAR STEARNS ASSET
BACKED SECURITIES, I, LLC,
ASSET-BACKED CERTIFICATES,
SERIES 2007-AC2 and SELECT
PORTFOLIO SERVICING, INC.,
Defendants.

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§

CIVIL ACTION NO. H-14-3341

MEMORANDUM OPINION AND ORDER

Plaintiff Brian W. Justice ("Plaintiff") brought this suit to
quiet title against defendants Wells Fargo Bank, N.A., as Trustee
for the Registered Holders of Bear Stearns Asset Backed Securities,
I, LLC, Asset-Backed Certificates, Series 2007-AC2 ("Wells Fargo")
and

Select

Portfolio

"Defendants") . 1

Servicing,

("SPS")

Inc.

(collectively,

Pending before the court are Defendants' Motion

for Summary Judgment (Docket Entry No. 14) and Plaintiff Brian W.
Justice's Motion for Summary Judgment

("Plaintiff's Motion for

Summary Judgment")

(Docket Entry No. 15).

below,

Motion for Summary Judgment will be granted,

Defendants'

For the reasons stated

Plaintiff's Motion for Summary Judgment will be denied, and this
action will be dismissed with prejudice.
1

See Plaintiff's Original Complaint
Docket Entry No. 1.

("Original Complaint") ,

I.

Background

Plaintiff executed a note and a security instrument (together,
the "Loan") on December 1, 2006, in favor of Maverick Residential
Mortgage, Inc. ("Maverick") . 2

Maverick took a security interest in

Plaintiff's homestead in exchange for the home equity Loan. 3

In

February of 2007 Maverick transferred servicing of the Loan to EMC
Mortgage Corporation ("EMC")
the Loan. 5

4

Defendant SPS currently services

Defendant Wells Fargo has held the Loan as trustee

since September of 2008. 6

2

See Texas Home Equity Note, Exhibit A to Defendants' Motion
for Summary Judgment, Docket Entry No. 14-1i Texas Home Equity
Security Instrument, Exhibit B to Defendants' Motion for Summary
Judgment, Docket Entry No. 14-2.
3

See Original Complaint, Docket Entry No. 1, p. 3
Defendants' Original Answer, Docket Entry No. 7, p. 3 ~ 8.

~

7i

4

See December 21, 2006, Letter from EMC Mortgage Corporation
to Brian W. Justice, Exhibit I to Defendants' Motion for Summary
Judgment, Docket Entry No. 14-10.
5

See Defendants' Motion for Summary Judgment, Docket Entry
No. 14, p. 8. Defendant cites to Exhibit I to Defendants' Motion
for Summary Judgment, Docket Entry No. 14-10, as evidence of this
transfer on August 1, 2013.
Exhibit I is the letter noticing the
2006 transfer from Maverick to EMC. The summary judgment record
includes evidence that SPS was servicing the loan by late 2013.
See Declaration of Melissa Smith, Exhibit C to Defendants' Motion
for Summary Judgment, Docket Entry No. 14-3, p. 4 ~ 11i Demand
Letter-Notice of Default, Exhibit G to Defendants' Motion for
Summary Judgment, Docket Entry No. 14-8, p. 4.
6

Assignment of Note and Deed of Trust,
Exhibit H to
Defendants' Motion for Summary Judgment, Docket Entry No. 14-9.
Numerous entities were involved in the origination and servicing of
the Loan at issue in this case.
When their identities are not
material to Plaintiff's claim that the statute of limitations for
Defendants' foreclosure sale has expired, the court refers to them
collectively as Defendants, along with the named defendants in this
case.
-2-

Plaintiff

defaulted

on

the

Loan

by

June

of

2008. 7

On

December 16, 2008, Defendants sent Plaintiff a notice of default
and intent to accelerate. 8

Plaintiff did not cure the default, and

Defendants then sent him a notice of acceleration on March 12, 2009
(the "2009 Acceleration") . 9

On June 3,

2009, Defendants filed a

Texas Rule of Civil Procedure 736 Application for an expedited
order allowing foreclosure
Thereafter,

(the

"2009 Rule 736 Application") . 10

Plaintiff signed and returned a repayment agreement

(the "Repayment Agreement") to Defendants on September 23, 2009. 11
Plaintiff

made,

and

Defendants

accepted,

two

payments

Plaintiff signed and returned the Repayment Agreement:

after
one on

November 6, 2009, and one on December 7, 2009. 12
See Acceleration Warning (Notice of Intent to Foreclose),
Exhibit F to Defendants' Motion for Summary Judgment, Docket Entry
No. 14-7, p. 2 ~ 1.
7

See December 16, 2008, Notice of Default, Exhibit 1 to
Plaintiff's Motion for Summary Judgment, Docket Entry No. 15-1,
8

p. 2.

See Notice of Acceleration of Loan Maturity, Exhibit 2 to
Plaintiff's Motion for Summary Judgment, Docket Entry No. 15-1,
p. 3.
9

10

See Home Equity Foreclosure Application, Exhibit 10 to
Plaintiff's Motion for Summary Judgment, Docket Entry 15-1,
pp. 42-47. Because the Property is Plaintiff's homestead, the lien
can only be foreclosed on by court order.
Tex. Canst. art. XVI,
§ 50 (a) (6) (D); In re Erickson, 566 F. App'x 281, 284 (5th Cir.
2 014) .
11

See Repayment Agreement, Exhibit K to Defendants' Motion for
Summary Judgment, Docket Entry No. 14-12, pp. 4-8.
12

See Loan Service Records, Exhibit E to Defendants' Motion for
Summary Judgment, Docket Entry No. 14-6, pp. 19, 20.
See also
Supplemental Declaration Under Penalty of Perjury of Brian W.
(continued ... )
-3-

Defendants sent another acceleration notice to Plaintiff on
August 26, 2010 (the "2010 Notice of Acceleration") . 13

Defendants

subsequently filed another Rule 736 application on September 22,
2010 (the "2010 Rule 736 Application") . 14

Plaintiff sued Defendants

on October 27, 2011 (the "2011 Lawsuit"), alleging various causes
of action related to the Loan. 15

The court dismissed Plaintiff's

2011 Lawsuit on December 10, 2012, with prejudice as to some claims
and without prejudice as to others, after Plaintiff filed a motion
to dismiss. 16
In April of
Assistance. 17

2012

Plaintiff

signed a

Request

for Mortgage

No further action on this request is provided in the

12

( • • • continued)
Justice
("Plaintiff's Supplemental Declaration"),
Exhibit to
Plaintiff Brian W. Justice's Summary Judgment Reply ("Plaintiff's
Summary Judgment Reply"), Docket Entry No. 19-1, pp. 1-2.

13

See Notice of Acceleration of Texas Non-Recourse Home Equity
Loan, Exhibit D to Defendants' Motion for Summary Judgment ("2010
Notice of Acceleration") , Docket Entry No. 14-4.
As discussed
infra at Part II.B.2(a)ii, Plaintiff challenges the validity of
this letter and argues that Defendants have not established that
Plaintiff received the letter.
14

See Application for Expedited Foreclosure Proceeding Pursuant
to Rule 736 of the Texas Rules of Civil Procedure, Exhibit L to
Defendants' Motion for Summary Judgment, Docket Entry No. 14-13.
15

See Plaintiffs' Original Petition in the District Court of
Montgomery County, Texas, Ninth Judicial District, Exhibit M to
Defendants' Motion for Summary Judgment, Docket Entry No. 14-14.
16

See Order of Dismissal, Exhibit 16 to Plaintiff's Motion for
Summary Judgment, Docket Entry No. 15-2, p. 19.
17

See Request for Mortgage Assistance,
Exhibit C.9 to
Defendants' Motion for Summary Judgment, Docket Entry No. 14-3,
(continued ... )
-4-

summary

judgment

record

although

Plaintiff

had

apparently

previously requested a mortgage modification some time in 2010. 18
Despite these communications Plaintiff remained in default,

and

Defendants sent Plaintiff default notices on March 19, 2013, 19 and
October 1,

2013. 20

Defendants sent a notice of acceleration on

September 15, 2014 (the "2014 Acceleration") . 21
Acceleration,

Defendants filed a

Following the 2014

third Rule 736 application on

17

( • • • continued)
pp. 73-78.
Plaintiff includes a smaller portion of this document
in his summary judgment evidence.
See Request for Mortgage
Assistance, Exhibit 14 to Plaintiff's Motion for Summary Judgment,
Docket Entry No. 15-2, pp. 13-15.
18

Plaintiff also provides an earlier letter from EMC to
Plaintiff dated May 3, 2010.
See Response to Your Request For A
Loan Modification, Exhibit 15 to Plaintiff's Motion for Summary
Judgment, Docket Entry No. 15-2, pp. 16-18.
This letter and the
Request for Mortgage Assistance from 2012 also contain disclaimers
of abandonment.
However, according to Plaintiff, " [Plaintiff]
never accepted these proposals or made payments under them."
Plaintiff's Motion for Summary Judgment, Docket Entry No. 15, p. 3
~ 4 (b) .
As evidence that Plaintiff did not accept or make
payments, Plaintiff attaches a letter to Justice from EMC dated
January 8, 2010. See Letter Reminder - Your Trial Payment Has Not
Been Received, Exhibit 17 to Plaintiff's Motion for Summary
Judgment, Docket Entry No. 15-2, p. 20.
19

See Acceleration Warning (Notice of Intent to Foreclose) ,
Exhibit F to Defendants' Motion for Summary Judgment, Docket Entry
No. 14-7.
20

See Demand Letter-Notice of Default, Exhibit G to Defendants'
Motion for Summary Judgment, Docket Entry No. 14-8; Exhibit 4 to
Plaintiff's Motion for Summary Judgment, Docket Entry No. 15-1,
p. 8.
21

See Notice of Maturity/Acceleration of Texas Non-Recourse
Loan ( "2014 Notice of Acceleration") , Exhibit 5 to Plaintiff's
Motion for Summary Judgment, Docket Entry No. 15-1, p. 12.
-5-

October 15,

2014

(the "2014 Rule 736 Application") . 22

Plaintiff

filed this suit to quiet title on November 20, 2014. 23

II.
A.

Motions for Summary Judgment

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

(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."

Little v. Liquid Air Corp. ,

22

See Application for an Expedited Order Under Rule 736 on a
Home Equity or Home Equity Line of Credit Loan, Exhibit 12 to
Plaintiff's Motion for Summary Judgment, Docket Entry No. 15-2,
pp. 1-7.
23

See Original Complaint, Docket Entry No. 1. Note that under
a 2012 rule change if the respondent files an independent suit
challenging the foreclosure application, the Rule 736 Application
is stayed rather than abated. See Murphy v. HSBC Bank USA, No. H12-3278, 2015 WL 1392789, at *2 n.5 (S.D. Tex. March 25, 2015).
-6-

37 F.3d 1069, 1075 (5th Cir. 1994)
Celotex, 106 S. Ct. at 2553).

(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."
Indus. Co. v. Zenith Radio Corp., 106
"In

order

to

avoid

summary

there

is

The
some

Matsushita Elec.

s. Ct. 1348, 1356 (1986).

judgment,

the

nonmovant

must

identify specific facts within the record that demonstrate the
existence of a genuine issue of material fact."
Min. Co.
also

I

L.P., 565 F.3d 268, 273 (5th Cir. 2009)

articulate

the

precise

manner

in which

CO~

Inc. v. TXU

"The party must
the

submitted or

identified evidence supports his or her claim."
quotation marks and citation omitted) .

(internal

"When evidence exists in

the summary judgment record but the nonmovant fails even to refer
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
Sanderson Plumbing Prods.

I

or weigh the

and it may not make

evidence."

Reeves

Inc., 120 S. Ct. 2097, 2110 (2000).

v.
The

court resolves factual controversies in favor of the nonmovant,
-7-

"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.
B.

Analysis

Plaintiff's suit to quiet title relies on his allegation that
Defendants failed to foreclose on his property within the time
limit required by the Texas Civil Practices and Remedies Code,
rendering

the

lien on his property invalid or unenforceable. 24

Defendants respond that they abandoned earlier accelerations of the
so the statute of limitations has not run. 25

Loan,

Because the

summary judgment evidence establishes that the Repayment Agreement
was not effective and Defendants abandoned the accelerations, the

24

Plaintiff' s First Amended Complaint added a request for
declaratory judgment that limitations ran on Defendants' right to
foreclose on March 12, 2013
. result[ing] in voiding of the
lien." Docket Entry No. 12, p. 5 ~ 24.
Plaintiff requests this
relief "[i]n addition or in the alternative to an action to quiet
title." Id. "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, at *5
(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 quiet title claim will be
dismissed, his request for declaratory relief has no merit.
25

See Defendants'
No. 14, pp. 5-6.

Motion for Summary Judgment,
-8-

Docket Entry

statute of limitations has not expired, and Defendants are entitled
to summary judgment.
1.

The 2009 Repayment Agreement never took effect.

The Repayment Agreement that Plaintiff signed and returned to
Defendants

in

2009

contains

language

abandonment of acceleration. 26

language

is

not

expressly disclaims

Plaintiff argues that such language

should be given conclusive weight. 27
disclaimer

that

Defendants respond that the

controlling

Agreement did not take effect.

because

the

Repayment

Defendants argue that Plaintiff's

payments were untimely and too little for the Repayment Agreement
to take effect under its own terms. 28

Defendants also argue that

the statute of frauds bars enforcement of the Repayment Agreement,
which Defendants did not sign,

and also prohibits any purported

oral modifications. 29
(a)

The Repayment Agreement's Terms

Plaintiff and Defendants rely on the Repayment Agreement's
terms to support their respective motions for summary judgment.

26

Repayment Agreement, Exhibit 13 to Plaintiff's Motion for
Summary Judgment, Docket Entry No. 15-2, p. 9; p. 12 ~ 10.
27

See Plaintiff Brian W. Justice's Response to Defendants'
Motion for Summary Judgment ("Plaintiff's Response to Defendants'
Motion for Summary Judgment") Docket Entry No. 17 p. 2 ~ 1; p. 4.
1

1

28

See Defendants' Motion for Summary Judgment, Docket Entry
No. 14, p. 9; Defendants' Surreply to Plaintiff Brian W. Justice's
Summary Judgment Reply ("Defendants' Surreply") , Docket Entry
No. 23, p. 2.
29

See Defendants' Surreply, Docket Entry No. 23, pp. 2-3.
-9-

Defendants' primary argument depends on language in the Repayment
Agreement

section titled

"Binding effect."

It

states:

"This

Repayment Agreement is not valid and binding until EMC has received
the signed Repayment Agreement and the initial down payment by the
date specified in this paragraph[, November 1, 2009] ." 30
that

language,

Defendants contend that

requires

payments

Plaintiff's
Repayment

two

of

2009,

Agreement

31

$3,293.00

payments
is

the Repayment Agreement

(1) Plaintiff's first payment was not

never took effect because:
made until November 6,

Based on

were

not

and

(2)

the Repayment Agreement

to

be

valid

only

$3, 250. 00

effective,

the

and

binding,

each.

32

disclaimer

but

If

the

language

Plaintiff relies on cannot prevent abandonment of acceleration. 33
An offeree is required to "comply with all conditions placed
on the time and manner of acceptance" to accept an offer and create
a valid contract.

See Law v. Ocwen Loan Servicing,

F. App'x 790, 793-94 (5th Cir. 2014)
907 S.W.2d 454, 460 (Tex. 1995)

L.L.C.,

587

(citing Padilla v. LaFrance,

(finding that a loan modification

agreement was ineffective when acceptance was made conditional on
borrower faxing a signed copy of the agreement and making a down
payment by February 3,

2011, but borrower did not make the down

30

Repayment Agreement, Exhibit K to Defendants' Motion for
Summary Judgment, Docket Entry No. 14-12, pp. 6-7 ~ 2.
31

See Defendants' Surreply, Docket Entry No. 23, p. 2

32

See id. at 3-4

~

c.

-10-

~

a.

payment until February 8, 2011, and did not fax the agreement until
February 9) .

Plaintiff acknowledges that he did not make a payment

until November 6, 2009,
the circumstances. 35
that

it

can

payment[.]" 36

34

but argues that this is irrelevant under

He argues that the Repayment Agreement states

"even

become

effective

upon

Justice's

This argument ignores that Plaintiff failed to pay

the proper amount and paid late.
discrepancy

solely

in

amount

is

Plaintiff also argues that the

irrelevant

because

of

the

Repayment

Agreement's "clear disclaimer language." 37
The court

is

not persuaded by these

arguments and others

regarding language in the Repayment Agreement.

Because Plaintiff

failed to comply with the conditions placed on the time and manner

34

Plaintiff's Supplemental Declaration, Exhibit to Plaintiff's
Summary Judgment Reply, Docket Entry No. 19-1, pp. 1-2 ~ 3.
35

See Plaintiff Brian W. Justice's Summary Judgment Sur-SurReply ("Plaintiff's Sur-Sur-Reply"),
Exhibit A to Plaintiff
Brian W. Justice's Response to Defendants' Motion for Leave to File
Sur-Reply and Request in the Alternative for Leave to File
Responsive Sur-Sur-Reply ("Plaintiff's Request to File Sur-SurReply"), Docket Entry No. 21-1, pp. 3-4 ~ C.
36

See Plaintiff's Summary Judgment Reply, Docket Entry No. 19,
p. 3 ~ 5(a). Plaintiff also argues that even if he were late with
the first payment, that is irrelevant because the Repayment
Agreement did not allow the borrower to claim that acceleration had
been abandoned.
See Plaintiff's Summary Judgment Reply, Docket
Entry No. 19, pp. 5-6 ~~ d, e.
Whether the borrower could claim
abandonment under the terms of the Repayment Agreement or not,
Plaintiff did not comply with its requirements.
37

Plaintiff's Sur-Sur-Reply, Exhibit A to Plaintiff's Request
to File Sur-Sur-Reply, Docket Entry No. 21-1, pp. 3-4.
-11-

of acceptance,

the Repayment Agreement never became effective. 38

See Law, 587 F. App'x at 793-94; see also Williams v. Bank of Am.,
N.A.,

602 F. App'x 187, 188-89

(5th Cir.

2015)

(finding that an

offer for a Modified Mortgage "was ineffectual and did not give
rise to a valid contract" when plaintiff did not sign and return
the offer until five days after the offer's deadline).

Because the

Repayment Agreement never took effect, the disclaimer language did
not impact the parties' relationship or the Loan's status.
Relying on Hardy v. Wells Fargo Bank, N.A., No. 01-12-00945CV, 2014 WL 7473762 (Tex. App.-Houston [1st Dist.] 2014, no pet.),
Plaintiff also argues that whether the Repayment Agreement took
effect is irrelevant. 39
repayment

plan,

but

There, "the borrower failed to complete a

nevertheless

had payments

made

thereunder

accepted under various express disclaimers of abandonment in the
agreement.
appeals

The disclaimers were given effect by the court of

since

Lender." 40

their meaning

and effect

was

unrebutted by

The court is not persuaded by this argument.

the

In Hardy

the repayment plan disclaimers applied because the repayment plan
was undisputedly effective.

Here, because the Repayment Agreement

38

See Repayment Agreement, Exhibit K to Defendants' Motion for
Summary Judgment, Docket Entry No. 14-12, pp. 6-7 ~ 2. Plaintiff's
assertion that he and Defendants orally modified the Repayment
Agreement is addressed below.
39

Plaintiff's Sur-Sur-Reply, Exhibit A to Plaintiff's Request
to File Sur-Sur-Reply, Docket Entry No. 21-1, pp. 2-3.
40

Id. at 2, citing Hardy, 2014 WL 7473762, at *5.
-12-

was

not

effective,

the

disclaimers

are

not

controlling. 41

Defendants successfully abandoned earlier Loan accelerations, as
discussed below. 42
(b)

The Statute of Frauds

Defendants argue that the statute of frauds also precludes
enforcement of the Repayment Agreement.

Defendants argue that the

statute of frauds is a defense against the Repayment Agreement's
enforceability because the Repayment Agreement does not contain
Defendants' signature. 43

Defendants also argue that Plaintiff and

Defendants could not orally modify the written Repayment Agreement
through an alleged telephone conversation. 44

Plaintiff responds

that the statute of frauds is irrelevant. 45
A loan agreement

involving an amount

over $50,000

is not

enforceable in Texas unless it is in writing and signed by the
41

Plaintiff also cites a recent case from this court, Snowden
v. Deutsche Bank Nat'l Trust Co., 2015 WL 5123436. He asserts that
"in Snowden,
the agreement apparently lacked any express
disclaimers of abandonment . . . . " See Plaintiff's Sur-Sur-Reply,
Exhibit A to Plaintiff's Request to File Sur-Sur-Reply, Docket
Entry No. 21-1, pp. 2-3 ~A. Snowden does not address the issue of
disclaimers.
42

See Part
abandonment.

II.B.2(a)

infra

for

the

discussion

regarding

43

See Defendants' Response to Plaintiff's Motion for Summary
Judgment and Reply to Plaintiff's Response to Defendants' Motion
for Summary Judgment ("Defendants' Response and Reply"), Docket
Entry No. 18, p. 3.
44

See Defendants' Surreply, Docket Entry No. 23, pp. 2-3.

45

See Plaintiff's Sur-Sur-Reply, Exhibit A to Plaintiff's
Request to File Sur-Sur-Reply, Docket Entry No. 21-1, p. 3.
-13-

party to be bound.

Tex.

Bus.

&

Com.

Whittier v. Ocwen Loan Servicing,
(5th Cir.
Bank

of

2014)

N.A.

App.-Dallas 2009,

v.

pet.

Gaubert,

§26.02(b);

see

594 F. App'x 833,

L.L.C.,

Texas law defines

Texas,

Code Ann.

837

"loan agreement" broadly. 46
286

S.W.3d

disrn'd w.o.j.).

546,

~'

See,

554

(Tex.

Langlois v.

Wells Fargo Bank Nat'l Ass'n, 581 F. App'x 421, 425 (5th Cir. 2014)
(forbearance
F.

App'x

agreement);

326,

foreclosure);

328-29

Milton v.
(5th

Cir.

U.S.
2013)

Bank Nat l

1

(agreement

Gordon v. JPMorgan Chase Bank,

361, 364 (5th Cir. 2013)

Ass n

1

N.A.,

to

1

508

delay

505 F. App

1

X

(original mortgage documents).

The statute of frauds also requires modifications of loan
agreements to be in writing.
No. H-05-04253

1

See Deuley v. Chase Horne Fin. LLC

2006 WL 1155230

(citing Garcia v.

Karam,

1

at *2 (S.D. Tex. April 26

276 S.W.2d 255,

257

(Tex.

1

1

2006)

1955));

SP

Terrace, L.P. v. Meritage Homes of Texas, LLC, 334 S.W.3d 275, 282
(Tex. App.-Houston 2010 [1st Dist.], no pet.).

"An oral agreement

to modify the percentage of interest to be paid,

the amounts of

installments, security rights, the terms of the remaining balance
of the loan, the amount of monthly payments, the date of the first
payment, and the amount to be paid monthly for taxes and insurance

46

"Loan agreement" means one or more promises, promissory
notes, agreements, undertakings, security agreements, deeds of
trust or other documents or commitments, or any combination of
those actions or documents, pursuant to which a financial
institution loans or delays repayment of or agrees to loan or delay
repayment of money, goods, or another thing of value or to
otherwise extend credit or make a financial accommodation . . . . "
Tex. Bus. & Corn. Code Ann. § 26.02(a) (2)
-14-

is

an

impermissible

America Corp.,
Horner v.

oral

modification."

864 F. Supp. 2d 567, 582

Bourland,

724 F.2d 1142,

Montalvo

v.

Bank of

(W.D. Tex. 2012)

1148

(5th Cir.

(citing

1984)).

The

Repayment Agreement here is a modification of a "loan agreement"
and subject to the Texas statute of frauds.

47

The Repayment Agreement does not satisfy the statute of frauds
because

it

does

not

contain Defendants'

signature.

Plaintiff

points out that the Repayment Agreement does not have a place for
Defendants' signature, and the cover letter states that "A copy of
the

agreement

Plaintiff's) . 48

is

enclosed

for

your

(emphasis

However, Texas law requires loan agreements to be
See Law,

signed by the party to be charged.
793-94

signature"

(defendant

noteholder

never

signed

587 F. App'x 790,
the

proposed

loan

modification agreement, therefore, it was not a valid contract that
the

plaintiff

Snowden,

2015

could
WL

enforce

5123436,

against

at

*3

the

(noting

defendant) ;
that

a

see

also

modification

agreement was not properly initialed and indicating that it may not
have been enforceable);
Tex. 2 014)

In re Rosas,

520 B.R.

534,

540-41

(W.D.

(same) .

Plaintiff also alleges that he and Defendants orally modified
the Repayment Agreement.

Plaintiff states that he had a telephone

47

Further, the Repayment Agreement itself concerns a total
greater than $50,000, which places it in the statute of frauds.
See Deuley, 2006 WL 1155230, at *2-3.
48

Plaintiff' s Summary Judgment Reply, Docket Entry No. 19, p. 3
~ 5; p. 5 ~ b.
-15-

conversation with an EMC representative, who told him that his late
payment

would

be

accepted

under

the

Repayment

Agreement. 49

Thereafter, Defendants accepted two payments. 50

Plaintiff argues

that

was

this

establishes

Because

the

Repayment

frauds,

those

the

Repayment

Agreement

conversations

is

could

Agreement
subject
not

to

modify

the
the

effective. 51
statute

of

Repayment

Agreement without a written, signed confirmation.

See Saucedo v.

Rouhana,

*3

No.

4:14-cv-2401,

2015

WL

4638287,

at

(S.D.

Tex.

Aug. 4, 2015); SP Terrace, 334 S.W.3d at 282-83. 52

See id. at 5 ~ c.
See also Plaintiff's Supplemental
Declaration, Exhibit to Plaintiff's Summary Judgment Reply, Docket
Entry No. 19-1, pp. 1-2 ~ 3 and Plaintiff's Request to File SurSur-Reply, Docket Entry No. 21, p. 2.
49

50

p. 5

~

See Plaintiff's Summary Judgment Reply, Docket Entry No. 19,
c.

Id. at 2 ~ 3.
Plaintiff alleges that Defendants rely on a
"cryptic loan servicing entry" to show his payments were late. See
id.
However, Plaintiff himself admits that the first payment he
made was on November 6, 2009, five days after the initial down
payment was due under the Repayment Agreement.
See Plaintiff's
Supplemental Declaration, Exhibit to Plaintiff's Summary Judgment
Reply, Docket Entry No. 19-1, pp. 1-2 ~ 3.
51

52

Since the conversations concern a loan amount over $50,000,
even as a separate contract (rather than a modification) the
parties would have to have memorialized the agreement in a signed
writing.
See Deuley, 2006 WL 1155230, at *3.
"Moreover, even if
the Deuleys claim the oral agreement constituted a completely new
contract and not an oral modification, the statute of frauds still
applies. The Deuleys argue that their agreement with Chase was for
an assistance program designed to delay repayment or otherwise
financially accommodate them.
Under Texas law a loan agreement
includes agreements to "delay repayment of money" or "to otherwise
extend credit or make a financial accommodation. Hence, the Court
concludes the alleged oral agreement, even standing alone, is
subject to the statute of frauds and therefore unenforceable." Id.
(internal citations omitted).
-16-

Plaintiff argues

that

since he

is

not

claiming breach of

contract "in an attempt to enforce the repayment plan," Defendants'
statute of frauds argument is irrelevant. 53

Plaintiff argues that

Defendants failed to prove "that Justice was 'late' based solely on
a loan servicing notation of the date paid." 54

However, Plaintiff

paid too late and too little for the Repayment Agreement to take
effect, Defendants did not sign the Repayment Agreement, and the
alleged oral modifications are unenforceable.
has

not

asserted

limitations

a

argument

breach

of

contract

nevertheless

Although Plaintiff

claim,

relies

on

his
the

statute

terms

of

of
an

ineffective agreement. 55
2.

Defendants abandoned the Accelerations, and the statute
of limitations for foreclosure has not expired.

The primary issue in this case is whether Defendants abandoned
the 2009 and "purported" 2010 Accelerations.

Because the summary

53

Plaintiff's Sur-Sur-Reply, Exhibit A to Plaintiff's Request
to File Sur-Sur-Reply, Docket Entry No. 21-1, p. 3.
54

See id. ; Plaintiff's Summary Judgment Reply,
No. 19, p. 2 ~ 3.
55

Docket Entry

Finally, Plaintiff argues that the statute of frauds is
irrelevant. " [T] he repayment plan states that even timely payments
would not have mattered; the Lender could have foreclosed at any
time before completion of the last act under the repayment plan
since the repayment plan disclaimed abandonment under all
circumstances."
Plaintiff's Sur-Sur-Reply, Exhibit A to Plaintiff's Request to File Sur-Sur-Reply, Docket Entry No. 21-1, p. 2
~ B.
This argument is moot. Whether Defendants retained the right
to foreclose or not under the terms of the Repayment Agreement does
not impact abandonment since the Repayment Agreement was never
effective.
-17-

judgment evidence establishes that Defendants abandoned them,
statute

of

limitations

for

foreclosure

had

not

expired

the
when

Defendants filed the 2014 Rule 736 Application.
(a)

Abandonment

When a 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.
Tex. Civ. Prac. & Rem. Code Ann.
in Christ v. Wolf,

§

16.035; Holy Cross Church of God

44 S.W.3d 562,

567.

"If a note secured by a

real property lien is accelerated pursuant to the terms of the
note,

then the date of accrual becomes

accelerated."

the

date

the note was

Khan v. GBAK Properties, Inc., 371 S.W.3d 347, 353

(Tex. App.-Houston [1st Dist.] 2012, no pet.).

Where acceleration

is optional at the election of the note holder,
default does not automatically trigger the
Holy Cross, 44 S.W.3d at 566.

the borrower's

limitations period.

The foreclosure cause of action only

accrues when the holder actually exercises its acceleration option.
Effective acceleration requires:

( 1)

accelerate; and (2) notice of acceleration.

notice of intent to
Id.

The parties can abandon acceleration by agreement or conduct.
See

Clawson

v.

GMAC

Mortg.,

LLC,

No.

3:12-cv-00212,

2013

WL 1948128, at *3 (S.D. Tex. May 9, 2013); Khan, 371 S.W.3d at 356.
For instance, "[e] ven when a noteholder has accelerated a note upon
default,

the

holder

can

abandon
-18-

acceleration

if

the

holder

continues

to

accept

payments

without

available to it upon declared maturity."
566.

exacting

any

remedies

Holy Cross, 44 S.W.3d at

A lender can unilaterally abandon an acceleration.

Leonard

v.

Ocwen

WL 3561333, at *3
party

about

abandonment.

the

Loan

Servicing,

L.L.C.,

(5th Cir. June 9, 2015).
loan's

acceleration

14- cv- 2 0611,

2015

Statements by either

status

can

constitute

In re Rosas, 520 B.R. at 539 (citing Khan, 371 S.W.3d

at 355); see also Murphy, 2015 WL 1392789, at *11.
i.

The 2009 Acceleration

Plaintiff argues that more than four years passed between the
March 12,

2009,

Acceleration and the March 19,

2013,

notice of

default, which was "the lender's first signal that it would accept
less than the full payoff. " 56
Plaintiff

made

Defendants respond that the payments

post-Acceleration

in

2009

show

that

the

2009

Acceleration was abandoned. 57
Under Texas law by accepting payments of less than the fully
accelerated amount
Acceleration.

of

the

loan,

Defendants

abandoned

the

2009

See Rivera v. Bank of Am., N.A., 607 F. App'x 358,

56

Plaintiff' s Motion for Summary Judgment, Docket Entry No. 15,
p. 6 ~ 10; p. 9 ~ 16.
57

Defendants' Motion for Summary Judgment, Docket Entry No. 14,
pp. 6-7; 9; 12-14; 2010 Notice of Acceleration, Exhibit D to
Defendants' Motion for Summary Judgment, Docket Entry No. 14-4. As
discussed above, the Repayment Agreement was never effective, so
the disclaimers therein cannot preclude abandonment.
See Part
II.B.l.
-19-

360-61

(5th Cir.

2015); Leonard,

Cross, 44 S.W.3d at 566.
communications

are

Defendants

at *1-3; Holy

The Repayment Agreement and other loan

further

ineffective or unaccepted.
ii.

2015 WL 3561333,

evidence

of

abandonment,

even

if

See Snowden, 2015 WL 5123436, at *3. 58

The 2010 Acceleration

submitted

an

August

Notice

of

Acceleration with an authenticating affidavit as summary judgment
evidence. 59

The affidavit was executed by a custodian of records

for the law firm that represented Defendants and sent the 2010
Notice of Acceleration. 60

Plaintiff contends that the 2010 Notice

of Acceleration is unreliable because the affiant lacks personal
knowledge (she did not write the 2010 Acceleration letter), five

58

Plaintiff notes that Rule 736 Applications are "mere
proceedings of convenience" and not lawsuits.
Plaintiff's Motion
for Summary Judgment, Docket Entry No. 15, pp. 7-8.
Thus, they
"neither impair a lender's right to continue with foreclosure based
on a given acceleration, nor otherwise constitute an abandonment of
acceleration."
Id. citing Deutsche Bank Nat. Trust Co. v.
Ketmayura, No. A-14-CV-000931-LY-ML, 2015 WL 3899050, at *7 (W.D.
Tex.
June 11,
2015); Murphy,
2015 WL 1392789,
at *9-11.
Defendants' abandonment arguments do not depend on the Rule 736
Applications, however.
Defendants could have filed a judicial
foreclosure lawsuit or counterclaimed, but were not required to.
59

See 2010 Notice of Acceleration, Exhibit D to Defendants'
Motion for Summary Judgment, Docket Entry No. 14-4; Affidavit of
Dominique Varner ("Varner Affidavit"), Exhibit D.1 to Defendants'
Motion for Summary Judgment, Docket Entry No. 14-5.
60

See Varner Affidavit, Exhibit D.1 to Defendants' Motion for
Summary Judgment, Docket Entry No. 14-5, p. 1; 2010 Notice of
Acceleration, Exhibit D to Defendants' Motion for Summary Judgment,
Docket Entry No. 14-4, p. 3 ~ 1.
-20-

years

have elapsed since the document was allegedly served on

Plaintiff, and "[d]efendants have submitted no tracking proof." 61
Defendants respond that these challenges go to the weight and not
the admissibility of the Notice. 62
A

corporate

corporate

act,

representative
"such

as

is

mailing

qualified
notice

by

to

attest

certified

to

a

mail."

Rodriguez v. U.S. Bank, N.A., No. SA-12-CV-345-XR, 2013 WL 5173125,
at *2 (W.D. Tex. Sept. 12, 2013)
Servicing,

L.P.,

722 F.3d 249,

(citing Martins v. BAC Horne Loans
256

(5th Cir.

2013)).

Moreover,

Texas law does not require proof that the notice was received, and
"'the affidavit of a person knowledgeable of the facts
effect

that

service.'"

service

was

completed

is

prima

Id.; see also Tex. Prop. Code Ann.

facie
§

to the

evidence

51.002(e).

of
The

Varner Affidavit is by an employee with personal knowledge of the
business records kept

in the usual course of business,

and it

states that the Notice was served by first-class and certified mail

61

See Plaintiff's Response to Defendants' Motion for Summary
Judgment, Docket Entry No. 17, pp. 1-2.
Plaintiff's Summary
Judgment Reply, Docket Entry No. 19, p. 4 ~ 6.
62

See Defendants' Response and Reply, Docket Entry No. 18,
p. 5; Defendants' Motion for Summary Judgment, Docket Entry No. 14,
p. 10.
Plaintiff also challenges Defendants' summary j udgrnent
proof by asserting the 2010 Acceleration is irrelevant because of
a $145,000 increase in the amount owed from the 2009 Acceleration.
See Plaintiff's Response to Defendants' Motion for Summary
Judgment, Docket Entry No. 17, p. 2.
Plaintiff does not explain
further how the difference in payoff amount from an earlier notice
negates the relevance of the document.
-21-

on or around August 26, 2010. 63

It is therefore competent summary

judgment evidence.
The 2010 Acceleration was abandoned by subsequent actions of
the parties.

A lender can abandon acceleration by requesting

payment on less

than the

sending account

statements

full

amount of

the

loan,

such as by

indicating the past-due balance and

giving the borrower an option to cure his default.

See Leonard,

2015 WL 3561333, at *3-4; see also Boren v. U.S. Nat'l Bank Ass'n,
No. H-13-2160,

2014 WL 6892553, at *3

(a note-holder can abandon

acceleration by its actions, including mailing notice-of-intent-toaccelerate letters) .

Defendants sent Plaintiff a notice of default

and intent to accelerate in March of 2013. 64
that Plaintiff cure his default. 65

The notice demands

It does not require Plaintiff

to pay the entire accelerated balance of the Loan. 66
sent another notice of default on October 1, 2013. 67

Defendants
The two 2013

63

See Varner Affidavit, Exhibit D.1 to Defendants' Motion for
Summary Judgment, Docket Entry No. 14-5. Plaintiff also challenges
the apparent lack of a predicate default notice for the 2010
Acceleration as evidence of Defendants' mishandling of the loan and
"why the Lender allowed more than four years to pass between the
March 12, 2009 acceleration and the March 19, 2013 notice of intent
to accelerate." However, the 2009 Acceleration was abandoned, and
even a faulty notice of acceleration would not revive it.
64

See Acceleration Warning (Notice of Intent to Foreclose) ,
Exhibit F to Defendants' Motion for Summary Judgment, Docket Entry
No. 14-7, p. 2.
65

See id.

66

See id.

67

Demand Letter-Notice of Default, Exhibit G to Defendants'
Motion for Summary Judgment, Docket Entry No. 14-8, p. 4.
-22-

default

notices

put

Plaintiff

on

notice

that

Defendants

were

abandoning the 2010 Acceleration. 68
(b)

Plaintiff's Other Statute of Limitations Arguments

Plaintiff advances several other arguments in support of its
motion.

First, Plaintiff asserts that a loan cannot be accelerated

twice, arguing the 2010 Notice of Acceleration had "no legal effect
because the loan had already been accelerated. " 69
states,

the

law

requires

a

predicate

notice

of

As Plaintiff
default

"that

affords the borrower an opportunity to cure the default. " 70
Holy

Cross,

44

S.W.3d

at

566.

Whether

the

2010

Notice

See
of

Acceleration was proper or not, Defendants sent two default notices
in 2013, which is sufficient to abandon acceleration.
2014 WL 6892553, at *3.

See Boren,

Abandonment reinstates the loan, which can

then be accelerated upon borrower default.

See Holy Cross,

44

S.W.3d at 567.

68

Plaintiff also points out that Defendants sent Plaintiff
"solicitations for modifications" in this time period, and
"[m]erely sending a loan modification offer does not constitute
abandonment."
Plaintiff points to a 2012 Request for Mortgage
Assistance and a responsive letter from Defendants.
As evidence
that Plaintiff "never accepted these proposals or made payments
under them," Plaintiff attaches an earlier letter from EMC to
Plaintiff dated January 8, 2010 ("EMC has not received the trial
payment due the first of this month.") . Whether Plaintiff accepted
these proposals or made payments under them, this communication
does not determine the abandonment issues.
As discussed above,
Defendants abandoned the Accelerations.
69

Plaintiff's Response to Defendants'
Judgment, Docket Entry No. 17, pp. 5-6.
70

See id. at 5.
-23-

Motion

for

Summary

Plaintiff

also

argues

that

Defendants

imply

a

"false"

connection between the 2010 Acceleration and the 2010 Rule 736
Application because
Thus,

these documents

recite different payoffs. 71

the 2010 Rule 736 Application must be based on the 2009

Acceleration. 72

Plaintiff

asserts

that

this

shows

Defendants did not abandon the 2009 Acceleration. 73
respond

that

there

Application was

is

"no

based on

evidence"

the

2009

that

the

2010

Acceleration. 74

distinguish "payoff amount" and "principal balance." 75

that

the

Defendants
Rule

736

Defendants
Plaintiff

responds that the 2010 Rule 736 Application does not recite or
prove up any payoff, which is required. 76
that

Defendants

Rule

736

Plaintiff

have

not

Application
has

Acceleration,

not

and

shown a
the

connection between the

purported

established

a

2010

connection

2010

Acceleration. 77
with

the

2009

and neither party has proved for summary judgment

purposes which acceleration the
premised on.

Thus, Plaintiff argues

2010

Rule

736 Application was

Moreover, even if the 2010 Rule 736 Application was

71

See Plaintiff's Response to Defendants' Motion for Summary
Judgment, Docket Entry No. 17, p. 3.

73

See id.

74

See Defendants' Response and Reply, Docket Entry No. 18, p. 4.

Id.
"The principal amount accrues interest and is amortized
over the life of the loan.
However, the loan can still accrue
other charges while in default .
"
75

76

See Plaintiff's Summary Judgment Reply, Docket Entry No. 19,

p. 4 ~ 6.
77

See id.
-24-

based on the 2009 Acceleration, Plaintiff offers no explanation how
a Rule 736 Application could revive the previously abandoned 2009
Acceleration. 78
Plaintiff
limitations

argues

for

that

the

foreclosure

2011

because

Lawsuit

did

Defendants

not

toll

could

have

counterclaimed for judicial foreclosure in Plaintiff's 2011 Lawsuit
or filed a separate lawsuit. 79
2009

and 2010

Accelerations

Because Defendants abandoned the
before

the

statute of

limitations

expired, this argument is not relevant.
Finally,

Plaintiff argues

that disclaimer language

in the

security instrument precludes Defendants' abandonment of the 2009
Acceleration. 80

Defendants respond that the security instrument

language does not prevent later abandonment of acceleration, citing
78

See Part II. B. 2. (a) , Abandonment. Further, there is evidence
in the summary judgment record that Defendants voluntarily nonsuited the ·2010 Rule 736 Application in 2012.
There is a
"difference between intentional litigation conduct that evidences
a lender's intent to abandon acceleration of the debt, and mere
litigation procedure that does not commit the lender to abandonment
of acceleration."
Ketmayura, 2015 WL 3899050, at *6 (noting the
difference between dismissal of a Rule 736 Application triggered by
the filing of an independent lawsuit and voluntary action by a
lender to dismiss the Rule 736 Application) .
While the 2010
Rule 736 Application was dismissed by the Plaintiff's 2011 Lawsuit,
the 2012 Order of Nonsuit is evidence of voluntary litigation
conduct indicating abandonment. A lender can abandon foreclosure
even after obtaining an order allowing for foreclosure.
See
Snowden, 2015 WL 5123436, at *3.
See also Biedryck v. U.S. Bank
Nat'l Ass'n, No. 01-14-00017-CH, 2015 WL 2228447, at *5 (Tex.
App.-Houston [1st Dist.] May 12, 2015, no pet.)).
79

See
id.
at
9-10;
see
Objections
Interrogatories, Exhibit 20 to Plaintiff's
Judgment, p. 31, Interrogatory 4.
80

and Responses
to
Motion for Summary

See Plaintiff's Summary Judgment Reply, Docket Entry No. 19,
pp. 2 i 4-6.
-25-

Mendoza v.
Jan. 23,

Wells

Fargo Bank,

2015) . 81

N.A.,

2015

WL

338909

Plaintiff replies that he is

no~

(S.D.

Tex.

arguing that

Defendants could not have abandoned the accelerations,

but that

"the security instrument wording operates as a disclaimer of actual
abandonment

in

the

absence

evidence of abandonment.

II

82

of

any

other

clear

or

unrebutted

Plaintiff has provided no authority

"construing an anti-waiver provision in a deed of trust as barring
abandonment of acceleration.
("[a] bandonment

of

a

prior

11

Mendoza,

2015

acceleration

acceleration are separate issues .

.

11

and

waiver

at

of

*4

future

)

III.

Plaintiff's

WL 338909,

Conclusions and Order

Request

in the Alternative

for

Leave

to

File

Responsive Sur-Sur-Reply (Docket Entry No. 21) is GRANTED.
Because
abandoned the

the
2009

undisputed

facts

establish

and 2010 Accelerations,

that

Defendants

Defendants

are not

barred by limitations from foreclosing on Plaintiff's property.
Plaintiff's Motion for Summary Judgment is therefore DENIED, and
Defendants' Motion for Summary Judgment is GRANTED.
2015.

SIGNED at Houston, Texas, on this 8th

SIM LAKE
UNITED STATES DISTRICT JUDGE

81

See Defendants' Surreply, Docket Entry No. 23, p. 4

82

~

D.

See Plaintiff's Sur-Sur-Reply, Exhibit A to Plaintiff's
Request to File Sur-Sur-Reply, Docket Entry No 21-1, pp. 4-5.
-26-