Bitterroot Holdings, LLC v. MTGLQ Investors, L.P. et al
Filing
48
ORDER GRANTING 36 Motion for Summary Judgment; DENYING 37 Motion for Summary Judgment. Signed by Judge David A. Ezra. (rf)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
BITTERROOT HOLDINGS, LLC,
Plaintiff,
vs.
MTGLQ INVESTORS, L.P. and
BARRETT, FRAPPIER, TURNER &
ENGEL, L.L.P.,
Defendants.
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CV No. 5:14-CV-862-DAE
ORDER DENYING PLAINTIFF’S MOTION FOR PARTIAL SUMMARY
JUDGMENT AND GRANTING DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT
Before the Court is a Motion for Summary Judgment filed by
Defendant MTGLQ Investors, L.P. (“Defendant”) (Dkt. # 36). Also before the
Court is a Motion for Partial Summary Judgment filed by Plaintiff Bitterroot
Holdings, LLC (“Plaintiff”) (Dkt. # 37). The Court finds this matter for
disposition without a hearing pursuant to Local Rule CV-7(h). After careful
consideration of the motions and the supporting and opposing memoranda, the
Court, for the reasons that follow, GRANTS Defendant’s Motion for Summary
Judgment and DENIES Plaintiff’s Motion for Partial Summary Judgment.
1
BACKGROUND
On November 12, 2005, John Harvey (“Harvey”) executed a Texas
Home Equity Note (“Note”) in the amount of $94,320 payable to American Equity
Mortgage, Inc. (“AME”). (“Handville Aff.,” Dkt. # 36-2, Ex. A ¶ 6.) At the same
time, Harvey executed a Texas Home Equity Security Instrument (“Deed of
Trust”) granting a security interest in the property located at 9534 Cliff Creek, San
Antonio, Texas 78251 (the “Property”) to AME. (Id. ¶¶ 3, 6.) Mortgage
Electronic Registration Systems, Inc., as Nominee for AME, subsequently assigned
the Note and the Deed of Trust to Citimortgage, Inc. (“Citimortgage”). (Id. ¶ 7;
Dkt. # 36-5, Ex. A-3.)
On November 3, 2008, Citimortgage sent Harvey a Notice of Default
stating that Harvey was in default and that the loan would be accelerated if he did
not pay the past due amount. (Dkt. # 36-8, Ex. A-6.) On February 20, 2009,
Citimortgage sent Harvey a Notice of Acceleration stating that Citimortgage had
elected to accelerate the maturity of the debt. (Dkt. # 36-9, Ex. A-7.) After
Harvey failed to cure, Citimortgage filed an Application for Home Equity
Foreclosure Order in the 131st Judicial District Court of Bexar County, Texas on
April 22, 2009. (Dkt. # 36-10, Ex. A-8.) On November 3, 2009, Citimortgage
filed a motion to dismiss the application without prejudice, and the application was
subsequently dismissed. (Dkt. # 36-11, Ex. A-9; Handville Aff. ¶ 10.) On August
2
11, 2010, Citimortgage sent Harvey a second Notice of Acceleration stating that
Citimortgage had elected to accelerate the maturity of the debt. (Dkt. # 36-12, Ex.
A-10 at 49.) Citimortgage filed a second Application for Home Equity Foreclosure
Order in the 150th Judicial District Court of Bexar County, Texas on August 26,
2010. (Id. at 1.) On November 4, 2010, Citimortgage assigned the note and
security interest to Defendant MTGLQ. (Dkt. # 36-6, Ex. A-4; Handville Aff. ¶ 8.)
Citimortgage moved to voluntarily dismiss its second application on March 31,
2011, and the application was dismissed without prejudice on the same date. (Dkt.
# 36-21, Ex. E; Dkt. # 36-13, Ex. A-11.)
In 2011, in a proceeding unrelated to the outstanding loan held by
MTGLQ, the property was sold at auction to DTND Sierra Investments, LLC
(“DTND”) at a Homeowner’s Association foreclosure sale due to Harvey’s failure
to pay the homeowner’s association assessments and dues. (“Am. Compl.,” Dkt.
# 32 ¶ 11.) Plaintiff was ultimately assigned the interest purchased by DTND.
(Id.)
On June 28, 2012, Defendant Barrett, Frappier, Turner, & Engel,
L.L.P. (“Barrett”), acting as counsel for Defendant, sent Harvey a new Notice of
Default and opportunity to cure by paying the past due balance. (Dkt. # 36-14, Ex.
A-12.) On August 1, 2012, Barrett, on behalf of Defendant, sent a Notice of
Acceleration stating that Defendant had elected to accelerate the maturity of the
3
debt. (Dkt. # 36-15, Ex. A-13.) Defendant filed an Application for Home Equity
Foreclosure in the 166th Judicial District Court of Bexar County, Texas on June
24, 2013. (Dkt. # 36-16, Ex. A-14.) That court issued an order on November 8,
2013, allowing Defendant to proceed with a foreclosure sale under the terms of the
Deed of Trust. (Dkt. # 36-17, Ex. A-15.)
Plaintiff filed an Original Petition in the 73rd Judicial District Court
of Bexar County, Texas on August 1, 2014. (Dkt. # 1–3.) Defendant filed a
Notice of Removal on October 2, 2014, invoking this Court’s diversity jurisdiction.
(Dkt. # 1.) On November 3, 2014, Plaintiff filed a Motion to Remand (Dkt. # 4)
and a Motion for Leave to File Amended Complaint (Dkt. # 3), which this Court
denied in an Order issued on January 27, 2015 (Dkt. # 21). Defendant Barrett was
dismissed pursuant to Plaintiff’s voluntary motion on March 19, 2015. (Dkt. # 28.)
Plaintiff filed a First Amended Complaint on April 3, 2015. (Dkt.
# 32.) Plaintiff alleges that the foreclosure proceedings initiated by Defendant are
barred by the statute of limitations and that Defendant’s interest in the Property is
thus no longer enforceable. (Id. ¶ 17–19.) Plaintiff asserts claims for trespass to
try title and violations of the Texas Debt Collection Practices Act (“TDCPA”), and
seeks a declaration that Plaintiff is the owner of the property, a declaration that
Defendant is barred from foreclosing on the property by the statute of limitations,
damages, and attorney’s fees. (Id. ¶¶ 21–22, 27–28.)
4
On July 6, 2016, Plaintiff filed its Motion for Partial Summary
Judgment. (Dkt. # 37.) Defendant filed its Motion for Summary Judgment on the
same date. (Dkt. # 36.) Both parties have filed Responses (Dkt. ## 40, 42) and
Replies (Dkt. ## 43, 44) to the respective Motions, which are ripe for review.
LEGAL STANDARD
A court must grant summary judgment when “the movant shows that
there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Meadaa v. K.A.P.
Enterprises, L.L.C., 756 F.3d 875, 880 (5th Cir. 2014). “Substantive law will
identify which facts are material.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). A dispute is only genuine “if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.” Id.
In seeking summary judgment, the moving party bears the initial
burden of demonstrating the absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets this burden,
the nonmoving party must come forward with specific facts that establish the
existence of a genuine issue for trial. Distribuidora Mari Jose, S.A. de C.V. v.
Transmaritime, Inc., 738 F.3d 703, 706 (5th Cir. 2013) (quoting Allen v. Rapides
Parish Sch. Bd., 204 F.3d 619, 621 (5th Cir. 2000)). “Where the record taken as a
whole could not lead a rational trier of fact to find for the non-moving party, there
5
is no genuine issue for trial.” Hillman v. Loga, 697 F.3d 299, 302 (5th Cir. 2012)
(internal quotation marks omitted).
In deciding whether a fact issue has been created, “the court must
draw all reasonable inferences in favor of the nonmoving party, and it may not
make credibility determinations or weigh the evidence.” Kevin M. Ehringer
Enters. v. McData Servs. Corp., 646 F.3d 321, 326 (5th Cir. 2011) (quoting Reeves
v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)). However,
“[u]nsubstantiated assertions, improbable inferences, and unsupported speculation
are not sufficient to defeat a motion for summary judgment.” United States v.
Renda Marine, Inc., 667 F.3d 651, 655 (5th Cir. 2012) (quoting Brown v. City of
Hous., 337 F.3d 539, 541 (5th Cir. 2003)).
DISCUSSION
Defendant has moved for summary judgment on each of Plaintiff’s
claims for relief. Plaintiff’s Motion for Partial Summary Judgment seeks judgment
only on its claim that Defendant should be enjoined from foreclosing on the
property because Defendant’s foreclosure action is barred by the statute of
limitations. The Court will first consider the evidentiary objections raised by the
parties, and will then consider the Motions in turn.
6
I.
Evidentiary Objections
A.
Harvey Declaration
Defendant first objects to the Harvey declaration submitted by
Plaintiff in support of its Motion for Partial Summary Judgment on the basis that
the declaration is not subscribed as “true and correct.” An unsworn written
declaration may be subscribed by the declarant “as true under penalty of perjury,
and dated, in substantially the following form . . . ‘I declare . . . under penalty of
perjury that the foregoing is true and correct.’” 28 U.S.C. § 1746(2). A
declaration lacking a statement that its contents are true and correct is not in
substantial conformity with the statute and may not be considered as competent
evidence on summary judgment. Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300,
1306 (5th Cir. 1988). Defendant also objects to the fact that the declaration was
signed electronically.
Plaintiff has filed a Motion for Leave to File Corrected Declaration
(Dkt. # 46) in order to correct the technical error in Harvey’s declaration, and the
corrected version includes the required statutory language and a written signature.
The declaration is otherwise substantially identical. In the interest of giving full
consideration to the merits of Plaintiff’s claim, the Court GRANTS Plaintiff’s
Motion for Leave to File and will consider the corrected declaration on summary
judgment.
7
Defendant also objects to the statement in Harvey’s declaration that
“[i]n late 2008, I received a letter from Citimortgage indicating that they were
accelerating my loan and were going to foreclose on my home.” (“Harvey Decl.,”
Dkt. # 46-2 at 1.) Defendant argues that the statement is barred by Federal Rule of
Evidence 1002, which requires that the contents of a writing be proved by the
original writing. To the extent that Plaintiff seeks to use this statement as evidence
of the contents of the Notice of Acceleration, Defendant is correct. The statement
is admissible, however, to show that Harvey received a Notice of Acceleration
from Citimortgage in late 2008. Because the Notice referred to has been properly
submitted as evidence by both Plaintiff and Defendant, the question is largely
moot, and the Court will consider the document itself for proof of its contents.
(See Dkt. # 36-8, Ex. A-6; Dkt. # 37-5 at 1.)
B.
Schafer Declaration
Defendant also objects to the declaration of David P. Schafer
(“Schafer”), Plaintiff’s Company Representative. The Schafer declaration states
that “I have reviewed the Plaintiff’s Motion for Summary Judgment and the
statements contained in said Motion are true and correct.” (“Schafer Decl.,” Dkt.
# 37-3 at 1.) Defendant objects to this blanket verification of the contents of
Plaintiff’s Motion for Partial Summary Judgment on the basis that it fails to specify
8
which statements it seeks to verify and that it contains no indication of how or
whether Schafer has personal knowledge of the statements in question.
“An affidavit or declaration used to support or oppose a motion must
be made on personal knowledge, set out facts that would be admissible in
evidence, and show that the affiant or declarant is competent to testify on the
matters stated.” Fed. R. Civ. P. 56(c)(4). While a declaration need not expressly
state that its statements are based on the declarant’s personal knowledge, such
personal knowledge must able to be reasonably inferred from the declarant’s
position and the nature of his participation in the sworn matters. DIRECTV, Inc.
v. Budden, 420 F.3d 521, 530 (5th Cir. 2005).
The Schafer declaration contains no indication, beyond the conclusory
assertion that its statements are based upon Schafer’s personal knowledge, that
Schafer has personal knowledge of all of the statements contained in Plaintiff’s
Motion. The declaration includes no description of Schafer’s role or
responsibilities as Plaintiff’s Company Representative or the basis for his
knowledge of the factual circumstances at issue in this case. Even if his assertion
of the truth of the unspecified statements contained in the Motion were limited to
the Motion’s assertions of fact, as opposed to its legal arguments, there is no basis
from which to infer that he has personal knowledge of any or all such facts. While
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Schafer’s declaration adequately authenticates the documents attached to the
declaration, it cannot transform Plaintiff’s Motion brief into evidence. 1
C.
Handville Affidavit
Plaintiff objects to the affidavit of Howard R. Handville (“Handville”)
submitted by Defendant on the basis that Defendant failed to include Handville as
a witness in its Rule 26 initial disclosures. Plaintiff argues that Defendant’s failure
to include Handville in its initial disclosures requires the exclusion of his affidavit,
and the documents authenticated by his affidavit, under Federal Rule of Civil
Procedure 37(c). Defendant argues that its failure to disclose was harmless and
that exclusion of Handville’s affidavit would be an overly harsh sanction.
Under Rule 37, if a party fails to provide information or identify a
witness as required by Rule 26(a) or (e), the party may not use that information or
witness to supply evidence unless the failure was substantially justified or is
harmless. Fed. R. Civ. P. 37(c)(1). In evaluating whether a violation of Rule 26 is
harmless, courts consider “(1) the importance of the evidence; (2) the prejudice to
the opposing party of including the evidence; (3) the possibility of curing such
prejudice by granting a continuance; and (4) the explanation for the party's failure
to disclose.” Tex. A&M Research Found. v. Magna Transp., Inc., 338 F.3d 394,
402 (5th Cir. 2003).
1
Because the Motion’s statements are not evidence, the Court overrules
Defendant’s various objections to assertions made in Plaintiff’s Motion as moot.
10
Here, there is no indication, and Plaintiff does not argue, that
Defendant’s failure to include Handville as a witness in its initial disclosures
prejudiced Plaintiff. The Handville affidavit was executed on November 10, 2014,
and was previously used without objection in Defendant’s opposition to Plaintiff’s
Motion to Remand, which was filed on November 11, 2014. (See Dkt. # 4.) There
is thus no danger of surprise or prejudice from previously undisclosed evidence.
Additionally, the failure to submit initial disclosures appears to have been in part
due to the fact that the Court’s Scheduling Order, issued on November 25, 2014,
did not include a deadline for such disclosures. (Dkt. # 17.) Finally, the affidavit
authenticates many of the documents and records directly relevant to the claims at
issue in this action, and is thus highly important as the means of admitting this
documentary evidence. The Court therefore finds that Defendant’s failure to
include Handville in its initial disclosures was harmless, and overrules Plaintiff’s
objection to the Handville affidavit.
II.
Defendant’s Motion for Summary Judgment
Defendant argues that it is entitled to summary judgment on all of
Plaintiff’s claims for relief because there is no dispute of material fact as to
whether Defendant is entitled to foreclose on the Property in which Plaintiff claims
an interest. Defendant further argues that Plaintiff has failed to submit sufficient
evidence to create a genuine dispute of material fact as to its claims for trespass to
11
try title, and that Plaintiff lacks standing to bring a claim for violations of the
TDCPA. Because Plaintiff’s claims for declaratory and injunctive relief depend on
the viability of its substantive claims, see Harris Cnty., Tex. v. CarMax Auto
Superstores Inc., 177 F.3d 306, 312 (5th Cir. 1999); Sid Richardson Carbon &
Gasoline Co. v. Interenergy Res., Ltd., 99 F.3d 746, 752 n.3 (5th Cir. 1996), the
Court will address Plaintiff’s substantive claims first.
A.
Trespass to Try Title
“A trespass to try title action is the method of determining title to
lands, tenements, or other real property.” Tex. Prop. Code § 22.001. To prevail in
a trespass-to-try-title action, a plaintiff must prove (1) a regular chain of
conveyances from the sovereign, (2) superior title out of a common source, (3) title
by limitations, or (4) title by prior possession coupled with proof that possession
was not abandoned. Martin v. Amerman, 133 S.W.3d 262, 265 (Tex. 2004). The
cause of action “require[s] a plaintiff to prevail on the superiority of his title, not
on the weakness of a defendant’s title.” Id. Where, as here, the second means of
establishing title is at issue, a plaintiff must connect its title and the defendant’s
title through complete chains of title to the common source and then show that his
title is superior to the one derived from the common source by the defendant.
Wolfe v. Devon Energy Prod. Co., LP, 382 S.W.3d 434, 459 (Tex. App. 2012).
12
Plaintiff argues that its title to the Property, derived from a
homeowner’s association foreclosure sale, is superior to Defendant’s because the
statute of limitations has run on Defendant’s right to foreclose under the Note and
Deed of Trust. The only evidence of Plaintiff’s interest in the Property, however,
is the statement in Schafer’s declaration that “Bitterroot Holdings, LLC acquired
its interest in the property at 9534 Cliff Creek in San Antonio, Texas from DTND
Sierra Investments, LLC by way of an assignment.” (Schafer Decl. at 1.) Plaintiff
has submitted no evidence concerning the nature of its assigned interest in the
Property or when such interest was acquired. Plaintiff has also produced no
evidence that its chain of title is derived from the same source as Defendant’s
interest—Harvey’s original ownership interest in the Property. Lacking any
evidence in the record regarding the nature of its interest in the Property, the time
such interest was acquired, or the chain of title to such interest, Plaintiff has failed
to establish a genuine dispute of material fact as to whether its title is superior to
Defendant’s, and Defendant is entitled to judgment as a matter of law on this basis
alone.
Additionally, even if Plaintiff had submitted evidence establishing its
interest in the Property, the basis for its claim to superior title—that Defendant’s
right to foreclose is barred by the statute of limitations—is without merit. Under
Texas law, a sale of real property under a power of sale in a mortgage or deed of
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trust that creates a real-property lien must be made not later than four years after
the day the cause of action accrues. Tex. Civ. Prac. & Rem. Code § 16.035(b).
When the four-year period expires, the lien and the power of sale become void.
Tex. Civ. Prac. & Rem. Code § 16.035(d); Holy Cross Church of God in Christ v.
Wolf, 44 S.W.3d 562, 567 (Tex. 2001). If a note or deed of trust secured by real
property contains an optional acceleration clause, the action accrues only when the
holder actually exercises its option to accelerate. Wolf, 44 S.W.3d at 566.
Effective acceleration requires two acts: (1) notice of intent to accelerate, and
(2) notice of acceleration. See Shumway v. Horizon Credit Corp., 801 S.W.2d 890,
892 (Tex. 1991). Both notices must be “clear and unequivocal.” Id. at 893.
Even when a noteholder has accelerated a note upon default, the
holder can abandon acceleration if the holder continues to accept payments without
exacting any remedies available to it upon declared maturity. Id. at 566–67.
Acceleration can also be abandoned by agreement of the parties. Khan v. GBAK
Props., Inc., 371 S.W.3d 347, 356 (Tex. App. 2012) (citing San Antonio Real
Estate, Bldg. & Loan Ass’n v. Stewart, 61 S.W. 386, 388 (Tex. 1901)).
Additionally, where a debtor makes no objection, a creditor can abandon or rescind
its acceleration by voluntarily dismissing its claims against the debtor. Denbina v.
City of Hurst, 516 S.W.2d 460, 463 (Tex. Civ. App. 1974) (holding that “where the
payor makes no objection to the recall of the option, we see no reason why the
14
[payee] could not revoke the same as well as not to have exercised it in the
beginning”); DTND Sierra Invs. LLC v. Bank of N.Y. Mellon Trust Co., N.A., 958
F. Supp. 2d 738, 749–750 (W.D. Tex. 2013) (holding that unilateral notices of
rescission were sufficient to abandon acceleration); In re Rosas, 520 B.R. 534, 540
(W.D. Tex. 2014) (“The parties can establish abandonment through an agreement
or their actions alone, including unilateral actions in certain circumstances.” (citing
Khan, 371 S.W.3d at 353)).
In its Order denying Plaintiff’s Motion to Remand, this Court found
that the Notices of Acceleration issued by Citimortgage, Defendant’s predecessor
in interest, were abandoned when Citimortgage dismissed its respective claims
without prejudice in state court. (Dkt. # 21 at 14.) Additionally, the Notice of
Default sent on behalf of Defendant on June 28, 2012, which did not demand
payment of the full amount of the debt and only requested payment of the past due
amount, also would have operated to abandon the previous accelerations (had they
not already been abandoned). See Murphy v. HSBC Bank USA, — F. Supp. 3d —
, 2015 WL 1392789, at *11–12 (S.D. Tex. March 25, 2015); Leonard v. Ocwen
Loan Servicing, LLC, No. H-13-3019, 2014 WL 4161769, at *5 (S.D. Tex. Aug.
19, 2014), aff’d, 2015 WL 3561333 (5th Cir. June 9, 2015). Plaintiff now argues
for the first time that Citimortgage did not effectively abandon its Notices of
Acceleration because Harvey relied on one or both of the Notices of Acceleration
15
to his detriment. To support this argument, Plaintiff has submitted Harvey’s
declaration, in which Harvey states that he did not pay his debt to the homeowner’s
association because Citimortgage had accelerated his mortgage debt and initiated
foreclosure proceedings. (Harvey Decl. at 2.) Harvey further states that he would
have tried to obtain loan modification assistance if Citimortgage had not
accelerated his mortgage debt, and that he relied on Citimortgage’s acceleration of
the debt in deciding to move out of his home. (Id.)
Plaintiff relies on two cases for the proposition that a lender may not
abandon acceleration of a debt where the debtor has acted in reliance on the
acceleration: Callan v. Deutsche Bank Trust Co. Ams., 11 F. Supp. 3d 761, 769
(S.D. Tex. 2014), and Swoboda v. Wilshire Credit Corp., 975 S.W.2d 770, 776–77
(Tex. App. 1998). With regard to the former, the district court subsequently
amended its judgment, and reliance on the court’s original ruling is therefore
improper. See Callan v. Deutsche Bank Trust Co. Ams., 93 F. Supp. 3d 725, 2015
U.S. Dist. LEXIS 35626 (S.D. Tex. Mar. 21, 2015). The amended judgment,
however, does provide support for Plaintiff’s position. In a thorough review of
Texas case law, the district court found that Texas precedent suggested that
unilateral abandonment is not permitted where the debtor objects or detrimentally
relies on the notice of acceleration. Id. at *14. The court found that the debtor had
neither objected to nor detrimentally relied on the notice of acceleration issued by
16
the lender, and that the lender was therefore entitled to rescind its acceleration of
the debt. Id. at *31–33.
In Swoboda, which was reviewed by the Callan court, the Texas
appellate court held that “the election to accelerate can be revoked or withdrawn at
any time, so long as the debtor has not detrimentally relied on the acceleration.”
975 S.W.2d at 777. While Defendant argues that this statement “is nothing more
than dicta,” the court’s holding that the lender had abandoned its acceleration was
premised in part on its finding that the borrowers “neither asserted nor presented
any evidence that they relied on the acceleration,” and the court’s statement of the
rule was thus integral to its holding. See id. at 778. Defendant also attacks the
court’s statement of the rule on the basis that the supporting authority cited by the
court includes non-Texas case law. Where a state’s highest court has not ruled on
a particular legal issue, a federal court sitting in diversity must attempt to
determine how that court would rule. Rogers v. Corrosion Prods., Inc., 42 F.3d
292, 295 (5th Cir. 1995). “An intermediate appellate state court is datum for
ascertaining state law which is not to be disregarded by a federal court unless it is
convinced by other persuasive data that the highest court of the state would decide
otherwise.” Id. (editorial marks omitted) (quoting Comm’r v. Estate of Borsch,
387 U.S. 456, 465 (1967)). Swoboda is itself a Texas appellate court case, and is
not inconsistent with other Texas authority suggesting that an acceleration may not
17
be rescinded where the debtor objects to the rescission. See Denbina, 516 S.W.2d
at 463; Manes v. Bletsch, 239 S.W. 307, 308 (Tex. Civ. App. 1922). Given that
Swoboda’s detrimental reliance rule was derived from authority outside of Texas,
however, the Court agrees that it is less than clear that the Texas Supreme Court
would adopt the same rule.
Even if a lender’s objection to or reliance on an acceleration prevents
abandonment of the acceleration by the debtor under Texas law, the record
evidence does not create a dispute of material fact as to whether Harvey either
objected to or relied on Citimortgage’s Notices of Acceleration. There is no
evidence that Harvey objected to either of Citimortgage’s motions to dismiss its
state court foreclosure applications. Additionally, Harvey’s declaration does not
establish that he detrimentally relied on either of Citimortgage’s Notices of
Acceleration. To show detrimental reliance, a party must show that he materially
changed his position in reliance on another party’s promise or representation.
Sandel v. ATP Oil & Gas Corp., 243 S.W.3d 749, 753 (Tex. App. 2007)
(discussing reliance in the context of promissory estoppel); Harris Cnty., Tex. v.
MERSCORP Inc., 791 F.3d 545, 559 (5th Cir. 2015) (discussing reliance in the
context of fraudulent misrepresentation). Harvey’s decision not to pay off his debt
to the homeowner’s association, which he made because “[i]t did not make sense
for me to pay off the HOA amount if I couldn’t bring my home loan current,” does
18
not represent a change in Harvey’s position—he was in debt to his homeowner’s
association prior to Citimortgage’s acceleration of his mortgage debt, and he
remained in debt to his homeowner’s association after the acceleration. 2 His
statement that “I didn’t know about home loan modifications [sic] programs at the
time, but I would have tried to get some assistance when I did learn about them”
similarly does not qualify as a material change in his position.
Harvey also states that “as a result of the acceleration letter and the
lawsuit, I moved out of the home I lived at for many years.” (Harvey Decl. at 2.)
This statement is also insufficient to show detrimental reliance. First, the
declaration does not state when Harvey moved out of the home, and thus cannot
establish that he moved out prior to Citimortgage’s abandonment of its respective
Notices of Acceleration through its voluntary dismissals of its state court
foreclosure applications. Second, regardless of the timing, the declaration does not
establish that moving out of his home was a material change in Harvey’s position.
Absent any information regarding his living arrangements following his move—in
particular, whether he incurred any legal or financial obligations in acquiring a new
residence—Harvey’s declaration is insufficient to establish that moving out of the
2
Harvey does not state that he had been paying his homeowner’s association bills
or servicing his debt and subsequently stopped after Citimortgage accelerated his
mortgage debt. He states only that “I did not pay my debt because Citimortgage
sent me an acceleration letter telling me to pay the whole amount owed.” (Harvey
Decl. at 1.)
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Property represented a material change in his position taken in detrimental reliance
on either of Citimortgage’s Notices of Acceleration.
Plaintiff has thus failed to establish a genuine dispute of material fact
as to whether its title to the property is superior to Defendant’s, and Defendant is
entitled to judgment as a matter of law on Plaintiff’s claim for trespass to try title.
B.
Texas Debt Collection Practices Act
Defendant argues that it is entitled to summary judgment on Plaintiff’s
claims that Defendant violated the TDCPA because Plaintiff was not a party to the
acts complained of and thus lacks standing to bring such claims. Defendant further
argues that Plaintiff has failed submit sufficient evidence to establish a dispute of
material fact as to whether Defendant violated the TDCPA.
Under the TDCPA, “a debt collector may not use a fraudulent,
deceptive, or misleading representation” by “misrepresenting the character, extent,
or amount of a consumer debt, or misrepresenting the consumer debt’s status in a
judicial or governmental proceeding” or “using any other false representation or
deceptive means to collect a debt.” Tex. Fin. Code § 392.304(a)(8), (19). “Debt
collector” is defined to mean “a person who directly or indirectly engages in debt
collection,” id. § 392.001(6), and includes third-party debt collectors as well as
mortgage servicers and assignees, Davis v. Wells Fargo Bank, N.A., 976 F. Supp.
20
870, 885 (S.D. Tex. 2013) (citing Miller v. BAC Home Loans Servicing, L.P., 726
F.3d 717, 722 (5th Cir. 2013)).
The remedies afforded by the TDCPA are not limited to the actual
parties to a consumer transaction, and “[a]ny person against whom the prohibited
acts are committed may maintain an action for actual damages sustained as a result
of those violations.” Cushman v. GC Servs., LP, 657 F. Supp. 2d 834, 841 (S.D.
Tex. 2009) (citing Campbell v. Beneficial Fin. Co. of Dall., 616 S.W.3d 373, 375
(Tex. App. 1981) (allowing a nondebtor plaintiff to bring suit for harassing phone
calls because the alleged abuses were committed directly against her)); see also
Brush v. Wells Fargo Bank, N.A., 911 F. Supp. 2d 445, 472 (S.D. Tex. 2012);
Porterfield v. JP Morgan Chase, N.A., No. SA-12-CV-815-DAE, 2014 WL
3581183, at *21–22 (W.D. Tex. 2014).
This Court previously found that Plaintiff did not have standing to
bring a claim against Defendant Barrett because the allegedly fraudulent conduct—
sending the 2012 Notice of Acceleration and representing the acceleration date in
its 2013 state court foreclosure application—was directed to Harvey and the state
court, not against Plaintiff. (Dkt. # 21 at 16.) Because Plaintiff’s Amended
Complaint alleges the same conduct against Defendant, the Court’s analysis is
identical. While Plaintiff argues that Defendant’s efforts to foreclose on the
Property were directed at Plaintiff because the Property was “owned by Plaintiff,”
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there is no evidence in the record that Plaintiff in fact “owned” the Property. As
noted above, the only evidence of Plaintiff’s interest in the Property is Scharber’s
statement that Plaintiff, at an unspecified date, “acquired its interest in the
property . . . by way of an assignment.” (Scharber Decl. at 1.)
Additionally, even if Plaintiff had standing to bring its TDCPA
claims, there is no evidence that the complained-of conduct was fraudulent or
misleading. As discussed above, while Citimortgage accelerated Harvey’s debt in
2009 and 2010, each of these accelerations was abandoned when Citimortgage
voluntarily dismissed its foreclosure applications in state court. Defendant’s 2012
Notice of Acceleration was a lawful act to pursue foreclosure proceedings
following the abandonment of prior accelerations by Defendant’s predecessor in
interest, and there is no evidence that any of the statements made in Defendant’s
2013 foreclosure application were false. There is thus no dispute of material fact
as to whether Defendant violated the TDCPA, and Defendant is entitled to
judgment as a matter of law on Plaintiff’s TDCPA claims.
C.
Declaratory and Injunctive Relief
Plaintiff’s Amended Complaint includes “Petition for Declaratory
Relief” among its causes of action. (Dkt. #32 ¶ 22.) Plaintiff also requests that
Defendant be permanently enjoined from foreclosing on the Property. (Id. ¶ 20)
To be entitled to declaratory relief under the Federal Declaratory Judgment Act, 28
22
U.S.C. §§ 2201–2202, a plaintiff must allege facts demonstrating that there exists
“a substantial and continuing controversy between the two adverse parties.” Bauer
v. Texas, 341 F.3d 352, 358 (5th Cir. 2003). The Act does not create substantive
rights; it is merely a procedural device that enhances the remedies available to
plaintiffs in federal court. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667,
671–72 (1950); Appling Cnty. v. Mun. Elec. Auth. of Ga., 621 F.2d 1301, 1303
(5th Cir. 1980). Injunctive relief, like declaratory relief, is a remedy, and must be
based on a viable underlying legal claim. Yalamanchili v. Mousa, 316 S.W.3d 33,
39 (Tex. App. 2010).
Plaintiff has failed to present evidence establishing a genuine dispute
of material fact regarding the superiority of its title to the Property or Defendant’s
compliance with the TDCPA. In the absence of a viable substantive claim,
Plaintiff’s requests for declaratory and injunctive relief are without merit. See,
e.g., Marsh v. JPMorgan Chase Bank, N.A., 888 F. Supp. 2d 805, 815 (W.D. Tex.
2012).
The Court therefore finds that there is no genuine dispute of material
fact as to any of Plaintiff’s claims for relief, and that Defendant is entitled to
judgment as a matter of law. Accordingly, the Court GRANTS Defendant’s
Motion for Summary Judgment (Dkt. # 36).
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III.
Plaintiff’s Motion for Partial Summary Judgment
Plaintiff’s Motion “seeks Summary Judgment only as to its Claims for
Declaratory and Injunctive Relief.” (Dkt. # 37 at 8.) As discussed above,
declaratory and injunctive relief are remedies that must be based on viable
substantive legal claims. Because Plaintiff has failed to establish a dispute of
material fact sufficient to sustain its substantive claims for trespass to try title and
violations of the TDCPA, the Court DENIES Plaintiff’s Motion for Partial
Summary Judgment (Dkt. # 37.)
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant’s Motion
for Summary Judgment (Dkt. # 36) and DENIES Plaintiff’s Motion for Partial
Summary Judgment (Dkt. # 37).
IT IS SO ORDERED.
DATED: San Antonio, Texas, October 23, 2015.
_____________________________________
David Alan Ezra
Senior United States Distict Judge
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