HSBC Bank USA, National Association v. Erickson et al

Filing 20

ORDER GRANTING Plaintiff's 17 Motion for Summary Judgment. Signed by Judge Sam Sparks. (lt)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

HSBC BANK USA, NATIONAL
ASSOCIATION, AS TRUSTEE FOR

'°M3:21

CAUSE NO.:
A-17-CV-00429-SS

WELLS FARGO HOME EQUITY
ASSET-BACKED SECURITIES 2006-3
TRUST, HOME EQUITY ASSETBACKED CERTIFICATES, SERIES
2006-3;

Plaintiff,
-vs-

CRISTYN D. ERICKSON, WAYNE A.
ERICKSON,
Defendants.

ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause,
and specifically Plaintiff HSBC Bank USA, National Association, as Trustee For Wells Fargo

Home Equity Asset-Backed Securities 2006-3 Trust, Home Equity Asset-Backed Certificates,
Series 2006-3 (HSBC)'s Motion for Summary Judgment [#17], Defendants Cristyn D. Erickson
and Wayne A. Erickson Response [#18] in opposition, and HSBC's Reply [#19] thereto. Having

considered the case file and the applicable law, the Court enters the following opinion and
orders.

Background
This case relates to a home equity loan the Ericksons took out on their real property
located at 7000 Settlers Trail, Dripping Springs, Texas 78620 on October 11, 2006. Compi. [#1]
at 2-3.

The Ericksons borrowed $850,000 from Wells Fargo Bank, N.A. (Wells Fargo),

pledging the property as security for payment of the loan.
Compi. [#1-3] Ex.

3

(Security Instrument).

See

Compi. [#1-2] Ex. 2 (Note);

HSBC was assigned the Note by a corrective

/

assignment effective November 5, 2008 and recorded in the Hays County real property records

under Instrument No. ASSG2008O 16980779. See Compl. [#1-4] Ex. 4 (Assignment).
The Ericksons eventually defaulted. Wells Fargo, acting as mortgage servicer, sent a

Notice of Default and Intent to Accelerate to the Ericksons on July 18, 2012. See Compi. [#1-5]
Ex. 5 (Notice of Default and Intent to Accelerate). A Notice of Acceleration followed on August

21, 2012.

Compl. [#1] at 4.

Acting through counsel, Wells Fargo initiated foreclosure

proceedings on October 22, 2012. The Ericksons contested the foreclosure proceeding and filed
a lawsuit on March 4, 2013. See Erickson
SS.

eta! v.

Wells Fargo Bank, NA. et al, 1:13-CV-00236-

This Court granted Wells Fargo's motion for summary judgment and dismissed the

Ericksons' earlier lawsuit on January 23, 2014.
On June 16, 2016, HSBC notified the Ericksons that it had rescinded the prior

acceleration of the Loan. See Compl. [#1-6] Ex. 6 (Rescission Notice). Shortly thereafter, on
September 26, 2016, HSBC re-accelerated the Loan by filing an application for expedited order

authorizing foreclosure under Rule 736 of the Texas Rules of Civil Procedure. See Compl. [#1 8] Ex. 8 (Foreclosure Application).

HSBC filed this lawsuit on May 8, 2017 seeking a judgment authorizing foreclose of the
Ericksons' property. HSBC's complaint includes claims for breach of contract and foreclosure

of the lien. See Compl. [#1] at ¶J 16-33. The Ericksons assert a counterclaim for trespass to try
title and also request a declaratory judgment that HSBC's lien is invalid.

See Answer and

Countcl. [#9] at 5. HSBC has moved for summary judgment on its foreclosure claim and the

Ericksons' counterclaims. See Mot. Summ. J. [#17]. The motion is now ripe for consideration.

Analysis
I.

Legal StandardSummary Judgment
Summary judgment shall be rendered when the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine dispute as to any material fact
and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);
Celotex Corp.

v.

Catrett, 477 U.S. 317, 323-25 (1986); Washburn

(5th Cir. 2007). A dispute regarding a material fact is "genuine"

v.

Harvey, 504 F.3d 505, 508

if the evidence is such that a

reasonable jury could return a verdict in favor of the nonmoving party. Anderson

v.

Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the

court is required to view all inferences drawn from the factual record in the light most favorable
to the nonmoving party. Matsushita Elec. Indus. Co.

v.

Zenith Radio, 475 U.S. 574, 587 (1986);

Washburn, 504 F.3d at 508. Further, a court "may not make credibility determinations or weigh

the evidence" in ruling on a motion for summary judgment. Reeves

v.

Sanderson Plumbing

Prods., Inc., 530 U.S. 133, 150 (2000);Anderson, 477 U.S. at 254-55.
Once the moving party has made an initial showing that there is no evidence to support

the nonmoving party's case, the party opposing the motion must come forward with competent
summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at
586. Mere conclusory allegations are not competent summary judgment evidence, and thus are

insufficient to defeat a motion for summary judgment. Turner
476 F.3d 337, 343 (5th Cir. 2007).

v.

Baylor Richardson Med. Ctr.,

Unsubstantiated assertions, improbable inferences, and

unsupported speculation are not competent summary judgment evidence.

The party

Id.

opposing summary judgment is required to identif' specific evidence in the record and to
articulate the precise manner in which that evidence supports his claim. Adams

3

v.

Travelers

Indem. Co.

of Conn., 465 F.3d

156, 164 (5th Cir. 2006). Rule 56 does not impose a duty on the

court to "sift through the record in search of evidence" to support the nonmovant's opposition to
the motion for summary judgment. Id.

"Only disputes over facts that might affect the outcome of the suit under the governing
laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248.

Disputed fact issues that are "irrelevant and unnecessary" will not be considered by a court in

ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing
sufficient to establish the existence of an element essential to its case and on which it will bear
the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.

II.

Application
As indicated above, HSBC has moved for summary judgment on its foreclosure claim

and the Ericksons' counterclaims. The Court will address each in turn.
A. Judicial foreclosure

A court may order judicial foreclosure upon proof of debt and fixing the lien. Maldonado
v.

CitiMortgage, Inc., 676 Fed. Appx. 282, 284 (5th Cir. 2017) (citing Bonilla

S.W.2d 17, 21 (Tex.

App.Corpus Christi

v.

Roberson, 918

1996, no writ)). The party seeking such a remedy

must "prove a financial obligation and the lien securing it, a default on the loan, and that the

property subject to foreclosure is the same property subject to the lien." Id.
HSBC has presented evidence that it is entitled to judicial foreclosure. The Ericksons
signed the Security Instrument and Note for the loan from Wells Fargo. Wells Fargo assigned
the loan to HSBC. The Security Instrument and Note reflect Ericksons' loan obligations and lien

on their property secured by the loan. There is no dispute the Ericksons defaulted on the loan or

that the property HSBC seeks to foreclose on is the same property in the lien. Accordingly,

HSBC is entitled to judicial foreclosure as a matter of law.
The Ericksons do not dispute the facts above, but instead argue HSBC's claim for judicial
foreclosure is barred by the statute of limitations. Specifically, the Ericksons contend HSBC's
cause of action accrued on October 22, 2012, when HSBC initiated foreclosure proceedings in
state court. Resp. [#18] at 5. According to the Ericksons, HSBC's unilateral abandonment of the

acceleration in 2016 was ineffective because the Ericksons detrimentally relied on the earlier
acceleration. Id. at 4-6. Because more than four years have passed since October 22, 2012, the
Ericksons argue HSBC's claim for judicial foreclosure is barred. Id. at 7.

The Ericksons' limitation arguments are unavailing. A lender may rescind an earlier
acceleration of a loan as a matter of right with written notice sent by first class or certified mail.
See TEX. CIV. PRAc.

& REM. CODE

§

16.03 8. HSBC rescinded its earlier acceleration by written

notice on June 16, 2016 sent by certified mail. See Rescission Notice; See Resp. [#18] at

3

(acknowledging receipt of the same). The "detrimental reliance exception" relied upon by the
Ericksons has a tenuous legal foundation as no Texas "court has ruled in favor of a plaintiff on
the basis of the detrimental reliance exception." See Jatera Corp.

v.

US. Bank Nat'l Assoc.,

3:16-CV-0242-K, 2017 WL 3917674, at *5 (N.D. Tex. Sept. 7, 2017). The Court questions the

applicability of this equitable exception in light of the recent enactment of

§

16.038 which

explicitly permits unilateral rescission of acceleration.
Nonetheless, detrimental reliance is not applicable to this case.

In order to show

detrimental reliance, a party must show that he materially changed his position in reliance on

another party's promise or representation. Bitterroot Holdings, L.L. C.

v.

MTGLQ mv 'rs, L.P.,

648 F. App'x 414, 418 (5th Cir. 2016) (quotations and citations omitted). The Ericksons contend

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they materially changed their position by building a second home, and obtaining permits and
refinancing for the same.

Resp. [#18] at 6 (referencing declaration of Wayne Erickson).

However, as the name implies, detrimental reliance requires reliance to a detriment. Cf English
v.

Fischer, 660 S.W.2d 521, 524 (Tex. 1983) (listing the requisites of promissory estoppel, the

doctrine on which the detrimental reliance exception is based, as requiring "substantial reliance

by the promisee to his detriment").

The Court does not understand (nor do the Ericksons

explain) how expenditures on a second home constitutes detrimental reliance. In this case, a
second home improves the Ericksons' position by providing alternative shelter after HSBC's

foreclosure is complete. Thus, Ericksons have failed to offer a reason HSBC is not entitled to

judicial foreclosure.
B. Counterclaims

HSBC has also moved for summary judgment on the Ericksons' counterclaims. Mot.
Summ. J. [#17] at 6-8. The Court considers HSBC's motion for summary judgment on these

counterclaims as unopposed since the Ericksons have offered no arguments in response.
Summary judgement is also appropriate because no evidence has been offered in support these

counterclaims.

For instance, the Ericksons rely exclusively on conclusory assertions that

"Defendants own and claim a superior title to the property" and "Plaintiff's lien is invalid." See
"However, mere conclusory allegations are not competent

Answer and Countcl. [#9] at 5.

summary judgment evidence, and such allegations are insufficient, therefore, to defeat a motion
for summary judgment." Eason

v.

Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). The Ericksons'

request for declaratory judgment fails because they have no underlying and viable cause of
action.

See Hockessin Holdings, Inc

v.

Ocwen Loan Servicing, L.L. C., 5:1 5-CV- 1103 -DAE,

2016 WL 247727, at *5 (W.D. Tex. Jan. 19, 2016) ("Accordingly, to invoke relief under the

Federal Declaratory Judgment Act a plaintiff must have an underlying and viable cause of
action").

Conclusion
Accordingly,
IT IS ORDERED that Plaintiff HSBC Bank USA, National Association's Motion

for Summary Judgment [#17] is GRANTED.

SIGNED this the t

day of February 2018.

SAM SPARKS
SENIOR UNITED STATES DISTRICT JUDGE

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