Garcia v. U.S. Bank National Association et al
Filing
12
OPINION & ORDER re 7 Motion for Summary Judgment.(Signed by Judge Micaela Alvarez) Parties notified.(bgarces, 7)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION
November 14, 2016
David J. Bradley, Clerk
MANUEL GARCIA,
§
§
Plaintiff,
§
VS.
§ CIVIL ACTION NO. 7:15-CV-278
§
U.S. BANK NATIONAL ASSOCIATION, §
et al,
§
§
Defendants.
§
OPINION & ORDER
The Court now considers the motion for summary judgment,1 filed by U.S. Bank
National Association (“U.S. Bank”) and JPMorgan Chase Bank National Association (“JPMC”)
(collectively “Defendants”) on May 27, 2016. Manuel Garcia (“Plaintiff”) filed a response that
included a counter-motion for summary judgment on June 16, 2016,2 to which Defendants filed a
reply on June 21, 2016.3 In turn, Plaintiff filed a sur-reply on June 30, 2016.4
After duly considering the record and relevant authorities, the Court GRANTS
Defendants’ motion for summary judgment, and DENIES Plaintiff’s counter-motion for
summary judgment.
I.
Background
On June 22, 1999, Plaintiff received a loan for $48,800.00 from Long Beach Mortgage
Company (“Long Beach”) by signing a Texas Home Equity Adjustable Rate Note (“Note”).5
Under the Note, Plaintiff promised to repay $48,800.00 plus interest in monthly installments
1
Dkt. No. 7.
Dkt. No. 8
3
Dkt. No. 9.
4
Dkt. No. 11.
5
Dkt. No. 8-1, at pp. 9–12 (Plaintiff’s original petition explains that Plaintiff and his wife, Avelina Garcia, obtained
the home equity loan, yet only Plaintiff signed the Note.).
2
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from August 1, 1999 to July 1, 2014, with any remaining balance due in the final installment.6
Plaintiff and his wife, Avelina Garcia, signed a Texas Home Equity Security Interest securing the
financial obligations under the Note by granting a lien to Long Beach against their property at
823 West 7th Street, San Juan, Texas 78589 (“Plaintiff’s property”), with the following legal
description:
All of Lot 2, Block 5, Tierra Del Sol Subdivision, Inc., No. 2, an addition to the
City of San Juan, Hidalgo County, Texas, according to the map or plat thereof
recorded in Volume 19, Page 105, Map Records of Hidalgo County, Texas.7
Problems developed within the first few years as on November 18, 2002, First Union
National Bank (“First Union”), as Trustee for the Note, filed an Application for Expedited
Foreclosure pursuant to Rule 736 of the Texas Rules of Civil Procedure (“Rule 736
Application”).8 Plaintiff then filed for Chapter 13 Bankruptcy on April 10, 2003,9 but the
Bankruptcy proceeding was dismissed on July 21, 2005.10 Thereafter, on October 11, 2005,
notice of acceleration was sent to Plaintiff.11 Long Beach then assigned the Note to Wachovia
Bank, N.A. (“Wachovia”) on October 17, 2005,12 and on October 26, 2005, Wachovia filed a
Rule 736 Application.13
On October 19, 2006 and October 30, 2006, notices of intent to accelerate were sent to
Plaintiff.14 On December 22, 2006, notice of acceleration was again sent to Plaintiff.15 On
January 5, 2007, Wachovia filed another Rule 736 Application.16 On March 27, 2007, the 275th
6
Id. at p. 9.
Id. at p. 13.
8
Dkt. No. 8-1, at p. 5.
9
Id. at p. 23 (noting that bankruptcy petition was filed on April 10, 2003).
10
Dkt. No. 8-1, at p. 25.
11
Id. at p. 37.
12
Dkt. 8-1, at p. 44.
13
Id. at p. 27.
14
Dkt No. 7-2, at p. 14; Dkt. No. 7-2, at p. 17.
15
Id. at p. 40.
16
Dkt. No. 1-2, at p. 4.
7
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District Court of Hidalgo County, Texas granted Wachovia’s Rule 736 Application to allow
foreclosure.17 On June 4, 2007, Plaintiff again filed for Chapter 13 Bankruptcy. 18 In August
2007, Plaintiff made a payment that was applied as the monthly installment due for November
2004.19 On December 10, 2007, the Bankruptcy Court dismissed the bankruptcy proceeding.20
On May 13, 2011, yet another notice of intent to accelerate was sent to Plaintiff.21 In
February 2012, Wachovia’s October 26, 2015 Rule 736 Application was dismissed without
prejudice for lack of prosecution.22 On September 11, 2012 and January 17, 2013, once again,
notices of intent to accelerate were sent to Plaintiff.23 On July 23, 2014, U.S. Bank, as Trustee,
successor-in-interest to Wachovia, filed a Rule 736 Application.24 On April 22, 2015, the 92nd
District Court of Hidalgo County, Texas granted U.S. Bank’s Rule 736 application to allow
foreclosure.25
On May 28, 2015, Plaintiff filed suit asserting that Defendants are barred from
foreclosing because more than four years have passed since the initial acceleration in 2005. 26
Although not specifically brought as a declaratory judgment action, Plaintiff seeks judgment that
“the power of sale under the Note or Deed of Trust is null and void.”27 In other words, Plaintiff
seeks a declaratory judgment that the lien is void as the four year statute of limitations expired
17
Dkt. No. 7-2, at p. 57.
Id. at p. 60.
19
Id. at p. 3.
20
Id. at p. 116.
21
Id. at p. 43.
22
Dkt. 8-1, at p. 47.
23
Dkt. No. 7-2, at p. 20; Dkt. No. 7-2, at p. 27.
24
Dkt. No. 8-1, at p. 52.
25
Id. at p. 59.
26
Dkt. No. 1-2, at p. 6–7.
27
Id. at p. 7.
18
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before a sale was made. On September 16, 2015, JPMorgan sent Plaintiff notice of its rescission
and abandonment of acceleration.28
The Court now considers the instant motion for summary judgment whereby Defendants
ask the court to grant a take nothing summary judgment on all of Plaintiff’s claims and further
enter a judgment that any acceleration prior to September 16, 2015 was abandoned so that the
four year statute of limitations does not preclude foreclosure.
II.
Summary Judgment Legal Standard
Under Federal Rule of Civil Procedure 56, summary judgment is proper when there is
“no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.”29 “A fact is ‘material’ if its resolution could affect the outcome of the action, 30 while a
“genuine” dispute is present “only if a reasonable jury could return a verdict for the nonmoving
party.”31 As a result, “[o]nly disputes over facts that might affect the outcome of the suit under
the governing law will properly preclude the entry of summary judgment.”32
In a motion for summary judgment, the movant bears the initial burden of showing the
absence of a genuine issue of material fact.33 In this showing, “bald assertions of ultimate facts”
are insufficient.34 Absent a sufficient showing, summary judgment is not warranted, the analysis
is ended, and the non-movant need not defend the motion.35 On the other hand, the movant is
freed from this initial burden on matters for which the non-movant would bear the burden of
proof at trial; in that event, the movant’s burden is reduced to merely pointing to the absence of
28
Dkt. No. 7-2, at p. 121.
FED. R. CIV. P. 56(a).
30
Burrell v. Dr. Pepper/Seven UP Bottling Grp., Inc., 482 F.3d 408, 411 (5th Cir. 2007) (internal quotation marks
and citation omitted).
31
Fordoche, Inc. v. Texaco, Inc., 463 F.3d 388, 392 (5th Cir. 2006) (citation omitted).
32
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
33
See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
34
Gossett v. Du-Ra-Kel Corp., 569 F.2d 869, 872 (5th Cir. 1978) (citation omitted).
35
See Celotex Corp., 477 U.S. at 323.
29
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evidence.36 If the movant meets its initial burden, the non-movant must then demonstrate the
existence of a genuine issue of material fact.37 This demonstration must specifically indicate
facts and their significance,38 and cannot consist solely of “[c]onclusional allegations and
denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic
argumentation.”39
In conducting its analysis, the Court considers evidence from the entire record and views
that evidence in the light most favorable to the non-movant.40 Thus, although the Court refrains
from determinations of credibility and evidentiary weight, the Court nonetheless gives credence
to all evidence favoring the non-movant; on the other hand, regarding evidence that favors the
movant, the Court gives credence to evidence that is uncontradicted and unimpeachable, but
disregards evidence the jury is not required to believe.41 Rather than combing through the record
on its own, the Court looks to the motion for summary judgment and response to present the
evidence for consideration.42 Parties may cite to any part of the record, or bring evidence in the
motion and response.43 By either method, parties need not proffer evidence in a form admissible
at trial,44 but must proffer evidence substantively admissible at trial.45
36
See id. at 323–25; see also Transamerica Ins. Co. v. Avenell, 66 F.3d 715, 718–19 (5th Cir. 1995).
See Celotex Corp., 477 U.S. at 323–25.
38
See Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
39
U.S. ex rel. Farmer v. City of Houston, 523 F.3d 333, 337 (5th Cir. 2008) (citing TIG Ins. Co. v. Sedgwick James
of Wash., 276 F.3d 754, 759 (5th Cir. 2002)).
40
See Moore v. Willis Indep. Sch. Dist., 233 F.3d 871, 874 (5th Cir. 2000) (citations omitted).
41
See id.
42
See FED. R. CIV. P. 56(e).
43
See FED. R. CIV. P. 56(c).
44
See Celotex Corp., 477 U.S. at 324 (“We do not mean that the nonmoving party must produce evidence in a form
that would be admissible at trial in order to avoid summary judgment.”).
45
See Bellard v. Gautreaux, 675 F.3d 454, 460 (5th Cir. 2012) (“[T]he evidence proffered by the plaintiff to satisfy
his burden of proof must be competent and admissible at trial.”).
37
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III.
Discussion
Under Texas law, a party must bring suit for “the foreclosure of a real property lien not
later than four years after the day the cause of action accrues.”46 Generally, the cause of action
for a debt accrues on the maturity date, but may accrue earlier if the loan provides for
acceleration.47 In such case, the cause of action accrues upon effective acceleration, comprised of
notice of intent to accelerate and notice of acceleration.48 A Rule 736 Application preceded by a
notice of intent to accelerate may constitute notice of acceleration.49 “If acceleration is
abandoned before the limitations period expires, the note’s original maturity date is restored and
the noteholder is no longer required to foreclose within four years from the date of
acceleration.”50 Acceleration can be abandoned “by agreement or other action of the parties.”51
“A lender waives its earlier acceleration when it ‘put[s] the debtor on notice of its abandonment .
. . by requesting payment on less than the full amount of the loan.’”52 Later notice of intent to
accelerate “unequivocally manifest[s] an intent to abandon the previous acceleration,” and thus,
the statute of limitations period ceases to run.53 Additionally, “accepting payment for less than
the total amount of the debt while not pursuing other available remedies can demonstrate
abandonment.”54
In this case, the maturity date of the note is July 1, 2014. Thus, any foreclosure must
occur within four years of that date at the latest. However, there have been multiple actions
46
47
TEX. CIV. PRAC. & REM. CODE § 16.035(a)).
Boren v. U.S. Nat’l Bank Ass’n, 807 F.3d 99, 104 (5th Cir. 2015) (citations omitted).
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001).
49
Burney v. Citigroup Global Markets Realty Corp., 244 S.W.3d 900, 904 (Tex.Ct.App. 2008) (“[N]otice of filing
an expedited application for foreclosure after the requisite notice of intent to accelerate is sufficient to constitute
notice of acceleration.”).
50
Leonard v. Ocwen Loan Servicing, L.L.C., 616 Fed.Appx. 677, 679 (5th Cir. 2015).
51
Boren v. U.S. Nat. Bank Ass’n, 807 F.3d 99, 104 (5th Cir. 2015) (quoting Khan v. GBAK Props., 371 S.W.3d 347,
353 (Tex.Ct.App. 2012)).
52
Id. at 106 (quoting Leonard, 616 Fed.Appx. at 677) (alteration in original).
53
Id.
54
In re Rosas, 520 B.R. 534, 539 (W.D. Tex. Oct. 14, 2014) (citing Holy Cross Church of God in Christ v. Wolf, 44
S.W.3d 562, 567 (Tex. 2001)).
48
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which either trigger the statute of limitations, or revert it to the original date. The latest of each is
generally an abandonment of the prior, provided that any such later abandonment occurred
within four years of the prior acceleration.
a.
November 18, 2002 Rule 736 Application
There is no evidence in the record providing that a notice of intent to accelerate preceded
the November 18, 2002 Rule 736 Application. However, assuming arguendo that this Rule 736
Application constituted acceleration, it was abandoned within four years by the July 21, 2005
notice of intent to accelerate. The statute of limitations beginning date thus reverted to July 1,
2014.
b.
October 11, 2005 Acceleration
The October 11, 2005 acceleration created by the notice of intent to accelerate on July 21,
2005 and the October 11, 2005 notice of intent to accelerate was abandoned by the October 19,
2006 notice of intent to accelerate. Again, the statute of limitations reverted to the original
commencement date.
c.
December 22, 2006 Acceleration55
On October 19, 2006 and October 30, 2006, notices of intent to accelerate were sent, and
only a single notice of acceleration followed. That notice of acceleration was sent on December
22, 2006, thus constituting acceleration as of that date. That acceleration was abandoned in two
ways. First, it was abandoned by the acceptance of Plaintiff’s payment in August 2007 that was
applied as the monthly installment due for November 2004. Second, the intent to accelerate sent
on May 13, 2011 abandoned the acceleration even though it was sent more than four years after
the notice of acceleration. The four year statute of limitations did not run because the limitations
55
The Court acknowledges that a Rule 736 Application was filed on January 5, 2007. Any acceleration that may
have been created by that Rule 736 Application was abandoned in the same manner as the December 22, 2006
acceleration.
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period was tolled by the automatic stay in Plaintiff’s 2007 bankruptcy. 56 The automatic stay
lasted for one hundred and sixty-six days, from June 27, 2007 until December 10, 2007. As a
result, the end date for the limitations period as accelerated became June 6, 2011. Since the intent
to accelerate sent on May 13, 2011 was prior to June 6, 2011, the accelerated statute of
limitations is not implicated.
d.
July 23, 2014 Acceleration
On May 13, 2011, September 11, 2012, and January 17, 2013, notices of intent to
accelerate were sent, followed by a Rule 736 Application filed on July 23, 2014. Thus, there was
acceleration on July 23, 2014, and it was then abandoned by the notice of rescission and
abandonment of acceleration sent on September 16, 2015.
e.
September 16, 2015 Notice of Rescission and Abandonment
The most recent notice was the notice of rescission and abandonment. As of this date,
four years have not passed since that notice was sent. As a result, the four year statute of
limitations does not preclude foreclosure, and thus there is still a valid lien against Plaintiff’s
property.
56
HSBC Bank USA, N.A. v. Crum, 2016 WL 728569, at *4 (N.D. Tex. Feb. 24, 2016) (noting that bankruptcy
proceedings tolled the statute of limitations for foreclosure on a Note).
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IV.
Holding
The Court finds that all accelerations prior to September 16, 2015 were abandoned, and
thus there is no effective acceleration to accrue a cause of action for purposes of the four year
statute of limitations to foreclose. As a result, the lien against Plaintiff’s property is still valid and
enforceable. For the foregoing reasons, the Court GRANTS Defendants’ motion for summary
judgment, and DENIES Plaintiff’s counter-motion for summary judgment. A final judgment will
issue separately.
IT IS SO ORDERED.
DONE at McAllen, Texas, this 14th day of November, 2016.
___________________________________
Micaela Alvarez
United States District Judge
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