LWL Construction, LLC v. Countrywide Home Loans, Inc. et al

Filing 37

MEMORANDUM OPINION AND ORDER denying 33 MOTION for Summary Judgment (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

Download PDF
United States District Court Southern District of Texas ENTERED July 31, 2017 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION LWL CONSTRUCTION, LLC d/b/a THE LESTER GROUP, § § § § § § § § § § § Plaintiff, v. COUNTRYWIDE HOME LOANS, INC. and DITECH FINANCIAL LLC, Defendants. David J. Bradley, Clerk CIVIL ACTION NO. H-15-3379 MEMORANDUM OPINION AND ORDER Pending before the court is Plaintiff's Motion for Summary Judgment ("Plaintiff's MSJ") (Docket Entry No. 33) . For the reasons explained below, the motion for summary judgment will be denied. I. Undisputed Facts This action concerns the validity of a lien on real property located in Brazos County, Texas. On September 10, 2015, plaintiff, LWL Construction, LLC d/b/a The Lester Group ("LWL") purchased a property located Brazos County, at Texas 1414 77845 Elkton (the Court, "Property"). College Station, The Property is subject to a Deed of Trust (the "Lien") signed by Michael Baker and Yvonne Baker (the "Borrowers") on March 26, 2004, securing payment of a note (the "Note") originally given to Spectrum Lending, Inc. On February 28, 2005, defendant Countrywide Home Loans, Inc. ("Countrywide") through its sent a Notice of Acceleration to the Borrowers counsel. 1 On May 13 1 2005 1 Countrywide filed a Rescission of Acceleration of Loan Maturity in Brazos County. 2 Countrywide then sent to the Borrowers four separate notices of default requesting payments of amounts less than the full amount due on the Note . 3 Each notice stated an amount "reinstate the loan" and to "cure the default." 4 necessary to Each notice also stated that payments "will be" accelerated if the default were not cured by the date provided. 5 The Borrowers entered into a Loan Modification Agreement with Countrywide on July 22, 2007. 6 LWL filed suit in the 85th Brazos County/ Texas/ on October 13 Judicial 1 2015 1 District Court of seeking a declaratory judgment that the Lien is invalid and unenforceable. Defendant Ditech Financial LLC ("Ditech") timely removed the action to this court. LWL, arguing that the limitations period for enforcement of Plaintiff Exhibit C, Entry No. 33-1 pp. 19-21. 1 attached to Plaintiff's MSJ 1 Docket 1 2 Exhibit A-1 to Defendants' Response and Brief in Opposition to Plaintiff's Motion for Summary Judgment ("Defendants' Response"), Docket Entry No. 36-1 pp. 3-4. 1 3 Exhibi ts A- 2 through A- 5 Entry No. 36-1, pp. 5-12. 4 Response, Docket Id. 5 to Defendants' Id. 6 Defendants' Exhibit A-6 attached to Defendants/ Docket Entry No. 36-1, pp. 13-14. 1 -2- Response/ the Lien has run, moves for summary judgment on the issue of the validity of the Lien. II. 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). "The movant accomplishes this by informing the court of the basis for its motion, and by identifying portions of the record which highlight the absence of genuine factual issues." Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992) (citing Fed. R. Civ. P. 56 (c)) . Topalian v. "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." CQ, Inc. v. TXU Mining Company, L.P., 565 F.3d 268, 273 (5th Cir. 2009). In reviewing the evidence "the court must draw all reasonable inferences in favor of the nonmoving party, credibility determinations or weigh the Sanderson Plumbing Products, and it may not make evidence." Inc., 120 S. Ct. 2097, Reeves 2110 v. (2000). 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." Liquid Air Corp. , 37 F.3d "Unsubstantiated assertions evidence." 1069, are not 1075 (5th competent Little v. Cir. summary 1994) . judgment Hugh Symons Group, plc v. Motorola, Inc., 292 F.3d 466, -3- 468 (5th Cir. 2002) 2548, 2553 (citing Celotex Corp. v. Catrett, 106 S. Ct. (1986)). And "[m] ere conclusory allegations are not competent summary judgment evidence." Id. (citing Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996)). III. A. LWL's Motion for Summary Judgment Nature of the Suit In pleading Plaintiff's in this Original action, Petition, LWL asserts which a remains cause of the action live for declaratory judgment that "Defendants' Claim of Lien is invalid and unenforceable." 7 In its Motion for Summary Judgment, LWL refers to its claim for "declaratory relief on its suit to quiet title and for declaratory judgment from the Court that Defendants' Claim of Lien is invalid and unenforceable." 8 the elements of an action to quiet LWL also cites in its motion title. 9 Based upon LWL' s allegations, the court concludes that the nature of this action is a suit to quiet title. " [A] litigant's request for declaratory relief does not alter a suit's underlying nature." City of El Paso v. Heinrich, 284 S.W.3d 366, 370 (Tex. 2009). "The elements of the cause of action to quiet title are that the plaintiff must show (1) an interest in a specific property, 7 Exhibit B-1 to Notice of Removal, Docket Entry No. 1-2, p. 3. 8 Plaintiff's MSJ, Docket Entry No. 33, p. 2. 9 Id. at 3-4. -4- (2) title to the property is affected by a claim by the defendant, and (3) the claim, unenforceable." 2012) although facially valid, is Vernon v. Perrien, 390 S.W.3d 47, (citation omitted). invalid 61 or (Tex. App. Because LWL's motion focuses on the third element, the court will direct its analysis to the validity of the Lien. B. Applicable Law "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." Tex. Civ. Prac. Rem. & Code 16.035 (a). § "On the expiration of the four-year limitations period, the real property lien and a power of sale to enforce the real property lien become void." Id. containing at an automatically 16.035(d). § optional upon default The limitations period for a note clause acceleration but "accrues only actually exercises its option to accelerate." God in Christ v. Wolf, 44 S.W.3d 562, 566 does when not the run holder Holy Cross Church of (Tex. 2001); see also Seigel v. U.S. Bank National Association, 218 F. Supp. 3d 541, 545 (S.D. Tex. 2 016) . The acceleration of a note can be abandoned "by agreement or other action of the parties." Boren v. Association, 807 F.3d 99, 104 (5th Cir. 2015) Properties, Inc. , 3 71 S. W. 3d 34 7, -5- 3 53 (Tex. U.S. National Bank (citing Khan v. GBAK App.- -Houston [1st Dist.] 2012, effect of no pet.)). restoring "Abandonment of acceleration has the the contract to its original condition," thereby "restoring the note's original maturity date" for purposes of accrual. Khan, 371 S.W.3d at 353 (citations omitted). Rescission or waiver of acceleration is effective if made by a written notice of a rescission or waiver served as provided in § 16.038(c) by the lienholder, attorney representing § 16.038(b) method § for the the servicer of the debt, lienholder on each debtor. or an Id. at But Section 16.038 "does not create an exclusive waiver 16.038(e). and rescission of acceleration." Id. at A lender may unilaterally abandon acceleration of a note "by sending notice to the borrower that the lender is no longer seeking to collect the full balance of the loan and will permit the borrower to cure its default by providing sufficient payment to bring the note current under its original terms." Boren, 807 F.3d at 105. C. Analysis LWL argues that the Lien is invalid and unenforceable because (1) ( 2) the as was accelerated more than four years ago and Defendants did not serve a writ ten notice of rescission or specific § Note 16.038. waiver of acceleration on the Borrowers pursuant to Defendants respond that the acceleration was rescinded, evidenced by the recorded Rescission, by the notices that Countrywide sent to the Borrowers seeking payments of less than the -6- full outstanding amount and by the signed Loan Modification Agreement. 10 The Fifth Circuit's holding in Boren is directly applicable to the facts of this case. In Boren the bank accelerated the borrowers' note but then sent notice to the borrowers that they could cure their default by paying a specified amount to bring the note current. Id. at 105-06. would accelerate specified the loan if amount. unequivocally The notice also stated that the bank the borrowers The manifested an court intent held to failed that abandon to pay the this the "notice previous acceleration and provided the Berens with an opportunity to avoid foreclosure if they cured their arrearage," limitations period. thus resetting the Id. at 106. Countrywide's notices expressly (1) allowed the Borrowers to cure their default with a specified payment less than the outstanding balance of the loan and (2) warned them that the note would be accelerated if specified date. notices in this they failed Applying Boren, case, at a to cure the court minimum, the default by a concludes that the raise a genuine issue of material fact as to whether the acceleration was abandoned within the limitations period and, therefore, whether the Lien is valid. LWL has therefore failed to establish that there is no genuine dispute about any material fact. 10 Because the notices of default are sufficient to raise a genuine issue of material fact as to the validity of the Lien, the court does not reach Defendants' other arguments. -7- IV. Conclusion and Order For the reasons stated above, the court concludes that LWL has failed to show that it is entitled to judgment as a matter of law on its quiet title claim. Accordingly, Plaintiff's Motion for Summary Judgment (Docket Entry No. 33) is DENIED. SIGNED at Houston, Texas, on this the 31st day of July, 2017. UNITED STATES DISTRICT JUDGE -8-

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?