De La Garza v. Bank of America, N.A.

Filing 15

ORDER GRANTING 10 Motion for Summary Judgment. Signed by Judge David A. Ezra. (aej)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
CASSANDRA DE LA GARZA,

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Plaintiff,
v.
BANK OF AMERICA, N.A.,
Defendant.

No. 5:15-CV-180-DAE

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT
Before the Court is a Motion for Summary Judgment filed by Bank of
America, N.A. (“BANA” or “Defendant”). (Dkt. # 10.) Pursuant to Local Rule
CV-7(h), the Court finds this matter suitable for disposition without a hearing.
After considering the briefs filed in support and in opposition, the Court, for the
reasons that follow, GRANTS Defendant’s Motion for Summary Judgment. (Dkt.
# 10.)
BACKGROUND
This case concerns whether the unilateral rescission of an acceleration
of a mortgage debt reset the four-year statute of limitations period for an entity to
foreclose on a mortgaged property.

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On March 29, 2004, Plaintiff and her ex-husband Michael De La
Garza 1 executed a Note in the amount of $122,035.00 in favor of RBC Mortgage
Company (“RBC”) to purchase property located at 11403 Layback Creek, San
Antonio, Texas 78201 (“the Property”). (Dkt. # 10-2, Ex. A-1.) To secure the
Note, Plaintiff and her ex-husband executed a Deed of Trust in favor of Mortgage
Electronic Registration Systems, Inc. (“MERS”), as nominee for RBC and RBC’s
successors and assigns. (Dkt. # 10-2. Ex. D.) On January 20, 2010, MERS
assigned the Deed of Trust to BANA’s predecessor-by-merger BAC Home Loans
Servicing, LP f/k/a Countrywide Home Loans Servicing LP. (Dkt. # 10-2, Ex. E.).
BANA and its predecessors-by-merger have serviced the loan since January 2005.
(“Garcia Aff.,” Dkt. # 10-2, Ex. A. ¶ 6.)
Plaintiff defaulted by falling behind on her mortgage payment
obligations beginning in January 2005. (Garcia Aff. ¶ 7; “Payment History,” Dkt.
# 10-2, Ex. A-2.) On November 1, 2006, BANA’s predecessor-by-merger sent
Plaintiff a formal notice that it had elected to accelerate the maturity of the loan
and conduct a foreclosure sale on December 5, 2006. (Dkt. # 10-2, Ex. B-2.)
However, the sale did not go forward. On January 29, 2010, BANA’s predecessorby-merger once again sent formal notice of its decision to accelerate the maturity

1

Michael De La Garza is not a party to this case.
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date of the loan and conduct a foreclosure sale on March 2, 2010. (Dkt. # 10-2,
Ex. B-2.) However, the sale did not occur.
On September 17, 2010, BANA’s predecessor-by-merger sent a
formal notice to Plaintiff by certified mail that it had elected to rescind the January
29, 2010 acceleration and all prior notices of acceleration. (“Notice of
Rescission,” Dkt. # 10-2, Ex. B-3.) Plaintiff never received notice of the rescission
of acceleration. (“De La Garza Aff.,” Dkt. # 11-1.) Plaintiff remained in default
by not making payments on the loan. (Garcia Aff. ¶ 8; De La Garza Aff.)
On November 8, 2014, BANA sent formal notice to Plaintiff of its
decision to accelerate the maturity date of the loan and to conduct a foreclosure
sale on December 2, 2014. (Dkt. # 10-2, Ex. C-1; “Williams Aff.,” Dkt. # 10-2,
Ex. C ¶ 5.) However, the sale did not occur because Plaintiff obtained a
Temporary Restraining Order from the 288th Judicial District Court in Bexar
County Texas. (Dkt. # 1-

On January 22, 2015, BANA once

again accelerated the debt by mailing Plaintiff a Notice of Acceleration and Notice
of Sale by certified mail to the Property. (Dkt. # 10-2, Ex. C-2.) The formal notice
informed Plaintiff that a foreclosure sale would occur March 3, 2015. (Id.) The
sale did not go forward because the parties apparently agreed to cancel a
Temporary Injunction hearing on the condition that BANA cancel the foreclosure
sale scheduled for March, 3, 2015. (Dkt. # 1-1 at 29.)
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On November 26, 2014, Plaintiff commenced this action in the 288th
Judicial District of Bexar County, Texas, seeking injunctive and declaratory relief
under the Texas Declaratory Judgment Act that BANA’s foreclosure on the
Property was time barred. (“Original Pet.,” Dkt. # 1-

On February

17, 2015, Plaintiff served BANA with process. (Dkt. # 1-1 at 4.) On March 10,
2015, BANA timely removed this action to this Court. (Dkt. # 1.)
On January 14, 2016, BANA filed a Motion for Summary Judgment.
(Dkt. # 10.) On January 28, 2016, Plaintiff filed her response. (Dkt. # 11.) On
February 4, 2016, BANA filed its reply. (Dkt. # 12.)
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,
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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
is no genuine issue for trial.” Hillman v. Loga, 697 F.3d 299, 302 (5th Cir. 2012).
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
Under Texas law by statute, “a person must bring suit for the recovery
of real property under a real property lien or the foreclosure of a real property not
later than four years after the day the cause of action accrues.” Tex. Civ. Prac. &
Rem. Code Ann. § 16.035(a). A cause of action accrues on the maturity date of the
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last note, obligation, or installment. Id. § 16.035(e). Accordingly, a cause of
action accrues and the four-year limitations period begins to run when the note
holder exercises its option to accelerate a debt. Holy Cross Church of God in
Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. App. 2001); Khan v. GBAK Properties,
371 S.W.3d 347, 353 (Tex. App. 2012). However, if “the accelerated maturity
date is rescinded . . . before the limitations period expires, the acceleration is
deemed rescinded . . . and the note . . . shall be [treated] as if no acceleration had
occurred.” Tex. Civ. Prac. & Rem. Code Ann. § 16.038(a). Rescission of
acceleration is effective if made by written notice. Id. § 16.038(b). Service of a
written notice rescinding acceleration is “complete when the notice is deposited in
the United States mail . . . and addressed to the debtor at the debtor’s last known
address.” Id. § 16.038(c).
“Where, as here, the proper resolution of the case turns on the
interpretation of Texas law, we are bound to apply Texas law as interpreted by the
state’s highest court.” Boren v. United States Nat. Bank Ass’n, 807 F.3d 99, 104
(5th Cir. 2015) (internal citation omitted). However, “the Texas Supreme Court
has not decided whether a lender may abandon its acceleration of a loan by its own
unilateral actions and, if so, what actions it must take to effect abandonment.” Id.
Recently, the Fifth Circuit made an “Erie guess”2 as to how the Texas Supreme

2

The Fifth Circuit actually used the phrase “Erie guess” in its Boren opinion.
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Court would resolve this issue. Id. 105. The Fifth Circuit found that “[t]he Texas
Supreme Court would likely hold that a lender may unilaterally abandon
acceleration of a note, thereby restoring the note to its original condition . . . by
sending notice to the borrower that the lender is no longer seeking to collect the
full balance of the loan.” Id.
Texas’ intermediate appellate courts all agree that a note holder may
unilaterally abandon acceleration of a debt so long as the borrower neither objects
to abandonment nor has detrimentally relied on its acceleration. See Swoboda v.
Wilshire Credit Corp.

(“[I]f a creditor

exercises the option to accelerate and makes a declaration to that effect, the
election to accelerate can be revoked or withdrawn at any time, so long as the
debtor has not detrimentally relied on the acceleration.”) disapproved of on other
grounds by Wolf, 44 S.W.3d at 570; Dallas Joint Stock Land Bank v. King, 167
S.W.2d 245, 247 (Tex. App. 1942) (“[A]fter a note has been declared all due under
a provision giving the holder the option to do so, [the holder may] waive or rescind
such action so as to reinstate the note and make it payable again according to its
original terms.”); Manes v. Bletsch, 239 S.W. 307, 308 (Tex. App.1922)
(“Appellant contends that, having already exercised his option, the same was
irrevocable. This may be true as against the will of the payer, but, where the payer
is not objecting to the recall of such option, we can see no reason why the payee
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could not revoke the same as well as not to have exercised it in the beginning.”);
see also Leonard v. Ocwen Loan Serv., L.L.C., 616 Fed. App’x. 677, 680 (5th Cir.
2015) (per curiam) (unpublished) (“[T]here is authority clearly establishing that the
lender's . . . action constituting abandonment of acceleration can be unilateral.”)
A cause of action initially accrued on November 1, 2006 when
BANA’s predecessor-by-merger accelerated Plaintiff’s mortgage debt. (Dkt. # 102, Ex. B-2.) Under Texas law, BANA had until November 1, 2010 to foreclose on
the Property. On September 17, 2010, BANA’s predecessor-by-merger sent a
formal notice to Plaintiff by certified mail that it had elected to rescind all prior
accelerations. (Notice of Rescission.) Neither party disputes that BANA acted
unilaterally in sending the Notice of Rescission. As explained above, while the
Texas Supreme Court has not ruled on the issue, it is likely the court would hold “a
lender may unilaterally abandon acceleration of a note, thereby restoring the note
to its original condition . . . by sending notice to the borrower that the lender is no
longer seeking to collect the full balance of the loan.” Boren, 807 F.3d at 105.
That is exactly what BANA did. BANA sent notice to Plaintiff via certified mail
that it was no longer seeking to collect on the full balance of the loan. (Notice of
Rescission; Dkt. # 12, Ex. A-1.) Such conduct by BANA restored the note to its
original terms, thereby ending BANA’s cause of action against Plaintiff and
mooting any relevant time under the statute of limitations.
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To the extent that Texas’ intermediate appellate courts recognize
unilateral rescission of acceleration only where the borrower neither objects to
rescission nor has detrimentally relied on acceleration, the Court reaches the same
result as above. There is no evidence in the record to indicate Plaintiff objected to
the rescission. In fact, Plaintiff admits she was unaware of the rescission until her
attorney showed her the Notice of Rescission during the pendency of this litigation.
(Garza Aff.) Further, Plaintiff has produced no evidence that she detrimentally
relied on the acceleration.3 Plaintiff fails to proffer facts that BANA made her a
promise. To the contrary, Plaintiff admits BANA made no promises: “They never
agreed to work with me. They never made an agreement with me. Excluding a
document I signed before a loan modification that [BANA] did not accept, they
never had me sign anything.” (Id.)
Finally, Plaintiff’s assertion that the Notice of Rescission is
ineffective because she never received it fails as a matter of law. Under Texas law
by statute, service of written notice rescinding acceleration is “complete when the
notice is deposited in the United States mail . . . and addressed to the debtor at the
debtor’s last known address.” Tex. Civ. Prac. & Rem. Code Ann. § 16.038(c).
There is no genuine dispute of the material fact that BANA sent the Notice of
3

The elements of detrimental reliance, or promissory estoppel, under Texas law
are: (1) a promise; (2) foreseeability of relieance thereon by the promisor; and (3)
substantial reliance by the promise to her detriment. Garcia v. Lucero, 366 S.W.3d
275, 280 (Tex. App. 2012).
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Rescission to Plaintiff to her last known address via certified United States mail.
(Dkt. # 12, Ex. A-1.)
Accordingly, the Court finds that there is no genuine dispute of
material facts and that as a matter of law BANA’s September 17, 2010 Notice of
Rescission restored the Note to its original condition. For that reason, BANA is
not precluded the opportunity to foreclose on the Property by the four-year statute
of limitations that began to accrue upon its initial acceleration.
CONCLUSION
For the reasons explained above, the Court GRANTS Defendant’s
Motion for Summary Judgment (Dkt. # 10).
IT IS SO ORDERED
IT IS FURTHER ORDERED that this case be DISMISSED WITH
PREJUDICE.
DATE: March 7, 2016.

_____________________________________
DAVID ALAN EZRA
UNITED STATES DISTRICT JUDGE

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