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)
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-
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