PNC Bank National Association v. Fisher et al
ORDER granting 24 Fishers' MOTION for Summary Judgment , denying 23 PNC's MOTION for Summary Judgment . (Signed by Judge Alfred H Bennett) Parties notified.(gclair, 4)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
PNC BANK NATIONAL ASSOCIATION,
WILLIAM C. FISHER IV, et al,
June 28, 2017
David J. Bradley, Clerk
CIVIL ACTION NO. 4:15-CV-01217
Before the Court are Plaintiff PNC Bank National Association's ("PNC") Motion for
Summary Judgment (Doc. #23), Defendants William C. Fisher, IV and Judy Raymond Fisher's (the
"Fishers") Motion for Summary Judgment (Doc. #24) and Brief in Support of their Motion (Doc.
#25), and the Fishers' Response to Plaintiffs Motion for Summary Judgment (Doc. #26). PNC did
not respond to the Fishers' Motion for Summary Judgment. Having considered the arguments and
the applicable legal authority, the Court grants the Fishers' Motion for Summary Judgment, and
denies PNC's cross-motion for summary judgment.
This case is a judicial foreclosure action brought by PNC against the Fishers. In response,
the Fishers countersued for a declaratory judgment that PNC's suit for judicial foreclosure is barred
given the applicable statute of limitations. As both parties agree the applicable statute of limitations
would have expired on April 24, 2013 without some type of tolling or abandonment, this case
hinges on whether PNC abandoned the initial acceleration of the applicable loan before the four
year statute of limitations expired.
The Fishers own a house located at 4642 Waring Street, Houston, Texas 77027, subject to a
home equity loan ("Note") and security instrument ("Deed of Trust") now payable to PNC. Doc.
#23, at 4-5. The Note was first assigned to RBC Bank ("RBC"). Doc. #23, at 5. The Note and the
Deed of Trust contained acceleration clauses, empowering the lender with an option to accelerate
the full balance of the loan in the event of a default. Doc. #23, Ex. 1, at 4-9.
The Fishers first failed to make their required monthly payment in November 2008, and
have made no payments since that date. See Doc. #24. As a result, RBC sent the Fishers a letter on
January 5, 2009, notifying them of the amount overdue, and providing them thirty days to cure the
default or face acceleration of the Note (the "Notice of Intent to Accelerate"). Doc. #23, Ex. 1, at
10. On April 24, 2009, after the Fishers failed to cure the default, RBC sent another notice
informing the Fishers that RBC had elected to accelerate the debt (the "April 24, 2009
Acceleration"). !d. at 12. After receiving this notice, Mr. Fisher attempted to negotiate a loan
modification with RBC. Doc. #24, Ex. 3, at 6. There is no evidence RBC offered Mr. Fisher a loan
modification, and a July 30, 2009 letter sent by RBC's attorney establishes that RBC did not accept
Mr. Fisher's requests for modification. Doc. #24, Ex. 2, at 4.
In September 2009, based on the April 24, 2009 Acceleration, RBC applied for an order
under Texas Rule of Civil Procedure 736 ("Rule 736") allowing it to proceed with an expedited
nonjudicial foreclosure. Doc. #23, at 6. The Fishers responded by filing a separate petition
challenging RBC's right to foreclose. !d. The Fishers' suit triggered automatic dismissal of RBC's
Rule 736 application pursuant to Texas Rule of Civil Procedure 736.11. Doc. #23, at 7. In
September 2011, RBC filed its second Rule 736 application. !d. The Fishers again filed suit
contesting RBC's right to foreclose and again RBC's application was automatically dismissed in
February of2012. !d. Later that year, RBC merged with and into PNC, and all parties agree PNC is
now the holder of the Note and Deed of Trust. 1 Doc. #24, at 2. PNC did not file a counterclaim
seeking to foreclose in response to the Fishers' lawsuits.
See Doc. #23. Instead, the Fishers
voluntary dismissed both suits without prejudice each time PNC's Rule 736 applications were
On October 19, 2011, after PNC's first Rule 736 application was dismissed, PNC sent a
second letter notifying the Fishers that the bank had elected to accelerate the debt (the "Second
Notice of Acceleration"). Doc. #23, Ex. 1, at 14. On two occasions in 2011, Mr. Fisher e-mailed
PNC again requesting a loan modification; PNC rejected both requests. Doc. #24, Ex. 3, at 14-15.
Finally, on September 6, 2013, PNC sent the Fishers a letter notifying them they could reinstate
their loan by paying $112,956.00-an amount less than the total accelerated balance (the
"Reinstatement Quote"). Doc. #23, Ex. 1, at 18. The Fishers did not make any payments to PNC in
response to the Reinstatement Quote or at any time since their original default. Doc. #24, at 2.
a. Motion for Summary Judgment
Summary judgment is appropriate if no genuine issue of material fact exists and the moving
party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). "The movant bears the burden
of identifying those portions of the record it believes demonstrate the absence of a genuine issue of
material fact." Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex
Corp. v. Catrett, 477 U.S. 317,322-25 (1986)). If the burden of proof at trial lies with the
nonmoving party, the movant may satisfy its initial burden by '"showing'-that is, pointing out to
the district court-that there is an absence of evidence to support the nonmoving party's case." See
Celotex, 477 U.S. at 325. While the party moving for summary judgment must demonstrate the
Accordingly, the Court refers to both entities as PNC for the remainder of this Order.
absence of a genume Issue of material fact, it does not need to negate the elements of the
nonmovant's case. Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) (citation
omitted). "A fact is 'material' if its resolution in favor of one party might affect the outcome of the
lawsuit under governing law." Sossamon v. Lone Star State of Texas, 560 F.3d 316, 326 (5th Cir.
2009) (quotation omitted). "If the moving party fails to meet [its] initial burden, the motion [for
summary judgment] must be denied, regardless of the nonmovant's response." United States v.
$92,203.00 in US. Currency, 537 F.3d 504, 507 (5th Cir. 2008) (quoting Little v. Liquid Air Corp.,
37 F.3d 1069, 1075 (5 1h Cir. 1994) (en bane)).
When the moving party has met its Rule 56 burden, the nonmoving party cannot survive a
summary judgment motion by resting on the mere allegations of its pleadings. The nonmovant must
identify specific evidence in the record and articulate how that evidence supports that party's claim.
Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir. 2007). "This burden will not be satisfied by 'some
metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions,
or by only a scintilla of evidence."' Boudreaux, 402 F.3d at 540 (quoting Little, 37 F.3d at 1075). In
deciding a summary judgment motion, the court draws all reasonable inferences in the light most
favorable to the nonmoving party. Connors v. Graves, 538 F.3d 373, 376 (5th Cir. 2008).
b. Limitations and Abandonment
Under Texas law, a secured lender must bring suit for judicial foreclosure of a real property
lien not later than four years after the day the cause of action accrues." Boren v. US. Nat. Bank
Ass'n, 807 F.3d at 104 (5th Cir. 2015), citing Tex. Civ. Prac. & Rem. Code § 16.035(a). The
applicable four-year statute of limitations for real property actions is found in Texas Civil Practice
and Remedies Code § 16.035, addressing (a) judicial foreclosures, and (b) nonjudicial foreclosures?
Clawson v. GMAC Mortg., LLC, Civ. A. No. 3:12-CV-00212, 2013 U.S. Dist. 2013 WL 1948128,
at *2 (S.D. Tex. May 9, 2013). Once the four-year period expires, "the real property lien and a
power of sale to enforce the real property lien become void." Tex. Civ. Prac. & Rem. Code§ 16.035
(d). If, as here, "a note or deed of trust secured by real property contains an optional acceleration
clause," the action accrues "when the holder actually exercises its option to accelerate." Holy Cross
Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001). Acceleration requires a "clear
and unambiguous ... (1) notice of intent to accelerate and (2) notice of acceleration." !d.
Even if a loan is accelerated, the holder can abandon its prior acceleration either through
joint action with the borrower, or through its own, unilateral action, which effectively restores the
note's original maturity date. See Leonard v. Ocwen Loan Servicing, L.L.C., No. 14-20611, 2015
WL 3561333 at *3 (5th Cir. June 9, 2015); see also Khan v. GBAK Props., 371 S.W.3d 347, 353
(Tex. Ct. App. 2012). One way a bank unilaterally abandons a prior acceleration is by sending a
statement requesting payment on less than the full amount of the loan. Leonard, 2015 WL 3561333
The statute of limitations is generally an affirmative defense and a defendant bears the
burden to plead, prove, and secure findings to support its affirmative defense. Holland v. Lovelace,
352 S.W.3d 777, 788 (Tex. App.-Dallas 2011, pet denied.). The same is true when a plaintiff
seeks a declaration that a particular limitations period has run. See Holy Cross, 44 S.W.3d at 566.
However, when a bank seeks to avoid limitations by claiming abandonment, the bank bears the
burden of proving such an abandonment occurred. See Murphy v. HSBC Bank USA, No. CV H-122
Plaintiff incorrectly relies on § 16.035(b) in their Motion for Summary Judgment, which governs
nonjudicial foreclosure. Doc #23, at 9. In this case, Plaintiff seeks judicial foreclosure. Accordingly,
the relevant provision is§ 16.035(a). See Clawson, 2013 U.S. Dist. 2013 WL 1948128, at *2, n.2.
3278, 2017 WL 393595, at *17 (S.D. Tex. Jan. 30, 2017) (stating a bank must produce conclusive
evidence of abandonment to avoid limitations).
Both parties agree the initial accrual date triggering the four year statute of limitations is
April24, 2009. Accordingly, unless PNC, or its predecessor in interest, abandoned the acceleration,
the statute of limitations on judicial foreclosure expired April 24, 2013. PNC filed this action for
judicial foreclosure on May 6, 2015. Thus, the only issue before the Court is whether PNC, or its
predecessor in interest, abandoned the April 24, 2009 Acceleration before the expiration of the
relevant statute of limitations. PNC contends that the April 24, 2009 Acceleration was abandoned
on three grounds: (1) the acceleration was abandoned by actions taken before April 24, 2013; (2)
even if it was not, the appropriate statute of limitations was tolled by the numerous lawsuits filed by
the Fishers resulting in the automatic dismissal of PNC's Rule 736 Applications; (3) given the
tolling, the Reinstatement Quote sent September 6, 2013 unequivocally abandoned the applicable
statute of limitations.
In regard to PNC' s first argument, the Court does not find any evidence that the April 24,
2009 Acceleration was abandoned through actions taken before April 24, 2013. PNC argues the
acceleration was abandoned within this time period because (1) the Fishers sought numerous
modifications of their loan, and (2) PNC sent the Fishers the Second Notice of Acceleration on
October 19, 2011. As to the Fishers' requests for loan modification, PNC rejected each and every
one of these requests. Had PNC chosen to work with the Fishers to modify the loan, or provided the
Fishers with an opportunity to pay less than the amount owed, the Fishers' requests for modification
may have been some evidence of abandonment by PNC. However, because PNC did neither, the
Fishers' requests for modification cannot constitute abandonment. As to the Second Notice of
Acceleration, case law is clear that a bare notice of acceleration is insufficient to establish
abandonment. ld. at *4. Allowing a holder to restart the limitations period by continuously sending
notices of acceleration "would make a mockery of the statute of limitations." Id. at *5. As such,
there is no evidence the April24, 2009 Acceleration was abandoned before April24, 2013.
PNC next argues "the running of the statute of limitations was abated" because of the
lawsuits filed by the Fishers in response to PNC's Rule 736 applications. Doc. #23, at 11. Under
Texas law, however, the automatic dismissal of a Rule 736 application does not toll the statute of
limitations for judicial foreclosure. Deutsche Bank Nat'l Trust Co. v. Ra Surasak Ketmayura, No. A14-CV-00931-LY-ML, 2015 WL 3899050, *8-9 (W.D. Tex. June 10, 2015); see also Murphy v.
HSBC Bank USA, 95 F. Supp. 3d 1025, 1037 (S.D. Tex. 2015). The right to seek judicial
foreclosure and the right to exercise the power of sale granted in a mortgage or deed of trust are
separate and distinct remedies. Erickson v. Wells Fargo, NA. (In re Erickson), 566 F. App'x 281,
284 (5th Cir. 2014). The key to Texas tolling rules is whether pending legal actions prevent the
exercise of a legal remedy. Flanary v. Mortg. Elec. Registration Sys., Inc., No. 4:15CV208-AMCMC, 2016 WL 3647983, at *11 (E.D. Tex. June 6, 2016), report and recommendation adopted,
No. 4:15-CV-208, 2016 WL 3633659 (E.D. Tex. July 7, 2016). As a Rule 736 proceeding is no
impediment to a suit for judicial foreclosure, a suit automatically dismissing a Rule 736 proceeding
does not toll the statute of limitations for judicial foreclosure. Deutsche Bank, 2015 WL 3 899050, at
*9; see also Davis v. Andrews, 88 Tex. 524, 529, 30 S.W. 432, 433-34 (Tex. 1895) (holding an
injunction halting foreclosure under a power of sale does not toll limitations when there is another
remedy available). Accordingly, tolling the statute of limitations for judicial foreclosure, a claim
completely separate from the Rule 736 process, is inappropriate.
As tolling is inappropriate, the September 6, 2013 Reinstatement Quote is no evidence of
abandonment because it was sent almost four months after the expiration of the applicable statute of
limitations. It is undisputed that sending a similar reinstatement quote within the statute of
limitations would have constituted unilateral abandonment of the acceleration, however, PNC sent
this document four months too late. As PNC has presented no evidence that the April 24, 2009
Acceleration was abandoned before the expiration of the applicable statute of limitations, PNC's
suit for judicial foreclosure is barred by the statute of limitations. As such, Defendants' Motion for
Summary Judgment is granted, and Plaintiffs Motion for Summary Judgment is denied.
For the foregoing reasons, the Fishers' Motion for Summary Judgment is GRANTED, and
PNC's Motion for Summary Judgment is DENIED.
It is so ORDERED.
JUN 2 8 2017
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