Wheeler v. U.S. Bank National Association, as Trustee for Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2006-NC1, No. 4:2014cv00874 - Document 37 (S.D. Tex. 2016)
Court Description: MEMORANDUM OPINION AND ORDER granting 31 MOTION for Summary Judgment, denying 34 Cross MOTION for Summary Judgment and Response to Defendant's Motion for Summary Judgment. (Signed by Judge Sim Lake) Parties notified.(aboyd, 4)
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Wheeler v. U.S. Bank National Association, as Trustee for Stru...rough Certificates, Series 2006-NC1 Doc. 37 United States District Court Southern District of Texas ENTERED February 10, 2016 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION PRISCILLA WHEELER, § § § § § § Plaintiff, v. U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR STRUCTURED ASSET SECURITIES CORPORATION MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-NC1, Defendant. David J. Bradley, Clerk CIVIL ACTION NO. H-14-0874 § § § § § § § MEMORANDUM OPINION AND ORDER Plaintiff Priscilla Wheeler U.S. Bank National Association, ("Plaintiff" or "Wheeler") sued as Trustee for Structured Asset Securities Corporation Mortgage Pass-Through Certificates, Series 2006-NC1 ("Defendant" or "U.S. District Court of Harris County, case to this court. 3 Bank") 1 Texas. 2 in the U.S. 269th Judicial Bank removed the Pending before the court are U.S. Bank's 1 Wells Fargo services the loan. See infra note 9. This opinion refers to U.S. Bank National Association, Wells Fargo, and counsel for these parties as "Defendant" or "U.S. Bank" when the actor's identity is immaterial. 2 See Original Petition and Request for Disclosures ("Petition"), Exhibit B1 to Notice of Removal, Docket Entry No. 12. 3 See Notice of Removal, Docket Entry No. 1. Dockets.Justia.com Motion for Summary Judgment Motion") (Docket Entry No. 31) ("Defendant's and Plaintiff's Cross Motion for Summary Judgment and Response to Defendant's Motion for Summary Judgment (Docket Entry No. 34) ("Plaintiff's Motion") . 4 For the reasons stated below, Defendant's Motion will be granted, Plaintiff's Motion will be denied, and this action will be dismissed with prejudice. I. In November of 2005, Background Wheeler executed a Fixed/Adjustable Rate Note (the "Note") Security Instrument (the "Deed of Trust") in favor of Home123 Corporation, the Texas Home Equity and a Texas Home Equity (together, the "Loan"), original lender. 5 The property securing the Loan is her homestead located in Houston, Texas, in Harris County (the "Property") . 6 Home123 Corporation later assigned the Note and Deed of Trust to U.S. Bank. 7 The Note 4 Docket Entries 34 and 35 are identical, so references are to Docket Entry No. 34. 5 See Note, Exhibit F to Defendant's Motion, Docket Entry No. 31-2, pp. 32-38; Deed of Trust, Exhibit G to Defendant's Motion, Docket Entry No. 31-2, pp. 40-65. See Affidavit of Alisha Mulder, a Vice President of Loan Documentation for Wells Fargo, N.A. d/b/a/ America's Servicing Company ("Mulder Affidavit"), Exhibit C to Defendant's Motion, Docket Entry No. 31-1, p. 18. 6 Lot 56, in Block 5, of Hawthorne Place, Section 1, an addition in Harris County, Texas (commonly referred to as 513 East Sunnyside, Houston, Texas, 77076) . See Deed of Trust, Exhibit G to Defendant's Motion, Docket Entry No. 31-2, p. 42; Affidavit of Priscilla Wheeler, Exhibit 9 to Plaintiff's Motion, Docket Entry No. 34-10, p. 2 ~ 2. 7 See Assignment of Note and Deed of -2- Trust, Exhibit I to (continued ... ) contains an acceleration clause, which allows the lender to accelerate the entire amount of remaining debt in the event of uncured default, provided that the lender gives proper notice. 8 Wheeler defaulted on her payment obligations, and U.S. Bank sent default notices to the Property in May, September, November, and December of 2007. 9 Wheeler failed to cure the default, and U.S. Bank sent her a notice of acceleration on October 15, 2008, through its foreclosure counsel. 10 filed a Rule foreclosure. 11 736 application See Tex. R. Civ. In January of 2009, U.S. Bank for P. expedited 736.1. (non-judicial) In February of 2009, Wheeler sent a letter to U.S. Bank asking it to modify her mortgage 7 ( • • • continued) Defendant's Motion, Docket Entry No. 31-2, p. 95. See Note, Exhibit F to Defendant's Motion, Docket Entry No. 31-2, p. 34 ~ 7(c). The Deed of Trust also allows the lender to accelerate the debt if the borrower transfers any legal or beneficial ownership in the Property. See Exhibit G to Defendant's Motion, Docket Entry No. 31-2, p. 50 ~ 17. 8 9 May 21, 2007, Notice of Default, September 10, 2007, Notice of Default, November 12, 2007, Notice of Default, December 31, 2007, Notice of Default ( "2007 Default Notices"), Exhibit 1 to Plaintiff's Motion, Docket Entry No. 34-2. Wells Fargo Bank, N.A., doing business as America's Servicing Co., sent the notices in its capacity as loan servicer. See Mulder Affidavit, Exhibit C to Defendant's Motion, Docket Entry No. 31-1, p. 18. 10 See Notice of Acceleration from Brice, Vander Linden & Wernick, P.C. to Priscilla Wheeler, Exhibit 2 to Plaintiff's Motion, Docket Entry No. 34-3. 11 In re: Order for Foreclosure Concerning 513 East Sunnyside Street, Cause No. 2009-04308, 152nd Judicial District, Harris County Foreclosure Application. Wheeler provides this citation but has not provided a copy of the application. -3- payments rather than foreclosing. 12 obtained an order authorizing it In May of to serve a 2009, U.S. Bank notice of sale on Wheeler and then to proceed with foreclosure on the Property. 13 U.S. Bank did not go through with a foreclosure sale. On December 3, 2009, U.S. Bank sent Wheeler another notice of acceleration. 14 In January of 2010, U.S. Bank filed another Rule 736 application for expedited foreclosure. Bank obtained Property . 16 another order allowing 15 it In June of 2010, U.S. to foreclose on Wheeler filed for bankruptcy in October of 2010. 17 the U.S. Bank subsequently accepted several payments towards the balance of 12 See February 10, 2009, Letter from Priscilla Wheeler Re: Loan # [redacted], Exhibit K to Defendant's Motion, Docket Entry No. 312, p. 101. 13 See Order Allowing Foreclosure in Cause No. 2009-04308 in the 152nd Judicial District of Harris County, Texas, dated May 1, 2009, Exhibit 3 to Plaintiff's Motion, Docket Entry No. 34-4. 14 See December 3, 2009, Notice of Acceleration, Exhibit 4 to Plaintiff's Motion, Docket Entry No. 34-5. The summary judgment record does not include a preceding notice of default and intent to accelerate, aside from the 2007 Default Notices. See Exhibit 1 to Plaintiff's Motion, Docket Entry No. 34-2. 15 See In Re: Order for Foreclosure Concerning 513 East Sunnyside Street, Cause No. 2010-02009, 234th Judicial District, Harris County Foreclosure Application. Wheeler did not attach a copy of the application. 16 See Order Allowing Foreclosure in Cause No. 2010-02009 in the 152nd Judicial District of Harris County, Texas, dated June 25, 2010, Exhibit 5 to Plaintiff's Motion, Docket Entry No. 34-6. 17 See In re: Priscilla Marie (Bankr. S.D. Tex. Oct. 4, 2010). -4- Wheeler, Cause No. 10-38795 the Loan. 18 Wheeler asserts that these payments were made by the bankruptcy trustee during the automatic stay period. 19 The bankruptcy court dismissed Wheeler's bankruptcy in June of 2011. 20 U.S. Bank sent Wheeler another notice of default and intent to accelerate in July of 2011. 21 On October 3, 2011, U.S. Bank sent the last notice of acceleration that preceded this litigation. 22 U.S. Bank filed a third Rule foreclosure in April of 2013. 23 736 application for expedited Wheeler brought this action on 18 The parties submitted two different loan payment histories. U.S. Bank alleges that Wheeler has not made any payments since May 4, 2011. See Defendant's Motion, Docket Entry No. 31, p. 6 (listing payments made on December 7, 2010, February 3, 2011, and May 4, 2011). U.S. Bank provided an excerpt of fifteen pages of loan documents with no labels or pinci tes. See Loan History, Exhibit D to Defendant's Motion, Docket Entry No. 31-2, pp. 2-16. Wheeler provided a "Customer Account Activity Statement" from America's Servicing Company. See Exhibit 6 to Plaintiff's Motion, Docket Entry No. 34-7, p. 7. This document shows payments received on the dates listed in Defendant's Motion and an additional payment on June 7, 2011. 19 See Plaintiff's Motion, Docket Entry No. 34, p. 4 ~ 13. 20 See Order Dismissing Case and Establishing Deadline for Filing Administrative Claims, June 13, 2011, Bankr. Docket Entry No. 50, In re: Priscilla Marie Wheeler, Cause No. 10-38795 (Bankr. S.D. Tex. Oct. 4, 2010). 21 See Notice of Default and Intention to Accelerate dated July 12, 2011 ("2011 Notice of Default"), Exhibit A to Defendant's Motion, Docket Entry No. 31-1, p. 2. 22 See Notice of Acceleration ( "2011 Notice of Acceleration"), Exhibit B to Defendant's Motion, Docket Entry No. 31-1, p. 8; Affidavit of Michael Burns, Exhibit E to Defendant's Motion, Docket Entry No. 32-2, pp. 18-19. 23 See In re: Order for Foreclosure Concerning 513 East Sunnyside Street, Cause No. 2013-23466, 295th Judicial District, Harris County Foreclosure Application. Wheeler did not attach a copy of the application. -5- February 26, 2014. 24 seeking a judgment After removal, U.S. Bank filed a counterclaim for judicial foreclosure, and, in the alternative, a court order authorizing non-judicial foreclosure. Wheeler filed an answer and an amended complaint. 26 25 Wheeler seeks to remove a cloud on the Property and to quiet title in her name, and asks the court to issue a declaratory judgment that U.S. Bank is barred from foreclosing by the four-year statute of limitations in Texas Civil Practice and Remedies Code II. 16.035. 27 § 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). Disputes about material facts are genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2510 24 See Petition, Exhibit B-1 to Notice of Removal, Docket Entry No. 1-2, p. 13. Tex. R. Civ. P. 736.11(a) provides that "[a] proceeding or order under this rule is automatically stayed if a respondent files a separate, original proceeding in a court of competent jurisdiction that puts in issue any matter related to the origination, servicing, or enforcement of the loan agreement, contract, or lien sought to be foreclosed . " Therefore, the April 2013 foreclosure application was automatically stayed. 25 p. 4 See Defendant's Original Counterclaim, Docket Entry No. 12, ~~ 8-11. 26 See Plaintiff's Answer to Defendant's Original Counterclaim ("Plaintiff's Answer") , Docket Entry No. 13; Plaintiff's First Amended Complaint ("Amended Complaint"), Docket Entry No. 20. 27 See Amended Complaint, Docket Entry No. 20, pp. 3-5 -6- ~~ 16-26. (1986). The moving party is entitled to judgment as a matter of law if "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2552 (1986). A party moving for summary judgment "must 'demonstrate the absence of a genuine issue of material fact,' but need not negate the elements of the nonmovant's case." 37 F.3d 1069, 1075 (5th Cir. 1994) Celotex, 106 S. Ct. at 2553). Little v. Liquid Air Corp., (en bane) (per curiam) (quoting "If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant's response." this burden, Id. If, however, the moving party meets "the nonmovant must go beyond the pleadings" and produce evidence of specific facts demonstrating there is a genuine issue for trial. Id. nonmovant do "must (citing Celotex, 106 S. Ct. at 2553-54). more than simply show that metaphysical doubt as to the material facts." there is The some Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 106 S. Ct. 1348, 1356 (1986). "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." Min. Co., L.P., 565 F.3d 268, 273 (5th Cir. 2009) also articulate the precise manner in which identified evidence supports his or her claim." quotation marks and citation omitted) . CQ, Inc. v. TXU "The party must the submitted or (internal "When evidence exists in the summary judgment record but the nonmovant fails even to refer -7- to it in the response to the motion for summary judgment, evidence is not properly before the district court." Id. that (same). In reviewing the evidence "the court must draw all reasonable inferences in favor of the nonmoving party, credibility determinations or weigh the and it may not make evidence." Reeves Sanderson Plumbing Prods., Inc., 120 S. Ct. 2097, 2110 (2000). v. 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." Little, 37 F.3d at 1075. III. Analysis Wheeler's Motion focuses on her claim that U.S. Bank is barred from foreclosing because the statute of limitations has expired, while U.S. Bank argues that the statute of limitations ceased to run because it abandoned earlier accelerations. Wheeler also briefly argues that there is a fact issue as to her affirmative defense: that the lien is invalid because U.S. Bank failed to comply with the requirements of the Texas Constitution. 28 This argument will be addressed first. A. Validity of the Mortgage Wheeler's second affirmative defense alleges that the lien is invalid for failure to comply with Texas Constitution Article XVI, 28 See Plaintiff's Motion, Docket Entry No. 34, p. 13 Plaintiff's Answer, Docket Entry No. 13, p. 3. -8- ~~ 46-48; § 50(a) (6) (Q) (v) because Wheeler "was not provided with a copy of all executed documents signed by her at closing. " 29 See Tex. Canst. art. XVI or of a single 50 (a) (6) § ("The homestead of a family, adult person, shall be, and is hereby protected from forced sale, for the payment of all debts except for credit that . an extension of [is made on certain enumerated conditions.]"). U.S. Bank responds that even if there were constitutional infirmities at origination, the four-year statute of limitations has since expired and the lien is now valid as a matter of law. 30 The Fifth Circuit recently addressed the limitations under the Texas Constitution Article XVI, statute § of 50(a) (6). See Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667 (5th Cir. 2013) . In Priester, violated two the provisions 5 0 ( a) ( 6 ) (M) ( I ) and § of plaintiffs Texas 5 0 ( a) ( 6 ) ( N) . alleged Constitution Id. at 671. that defendants Article XVI: § The defendants argued that the plaintiffs' claims were barred by limitations, even though there is no express limitations period for claims under 50(a)(6). Id. at 672. The Fifth Circuit concluded that § the See Plaintiff's Motion, Docket Entry No. 34, p. 13 ~~ 46-48; Plaintiff's Answer, Docket Entry No. 13, p. 3 ("All conditions precedent have not been performed nor occurred. Specifically, Defendant failed to comply with all requirements of Texas Constitution Article XVI, §§ 50 (a) (6) (M) (I) & 50 (a) (6) (Q) (v) ."). 29 30 See Defendant's Response to Plaintiff's Cross-Motion for Summary Judgment and Reply to Plaintiff's Response to Defendant's Motion for Summary Judgment ("Defendant's Response"), Docket Entry No. 36, pp. 2-4. -9- residual statute Remedies Code § 50(a) (6) ." § of limitations in Texas Civil Practice and 16.051 "applies to constitutional infirmities under Id. at 673-74. 31 The "discovery rule" does not apply, and limitations begins to run when the parties create the lien. Id. at 675-76. Under this authority, Wheeler had four years from November 17, 2005, in which to challenge the validity of U.S. Bank's lien based on failure to comply with Tex. Const. art. XVI, § 50 (a) ( 6) . Wheeler's first challenge came in October of 2014, nearly ten years later, 32 and is barred by limitations. 33 31 The Fifth Circuit noted that, although the Texas Supreme Court has not addressed the issue, the two Texas courts of appeals that have addressed the issue found that the residual statute applies. Id. (citing Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d 834, 839 (Tex. App.-Dallas 2008, no pet.), and Schanzle v. JPMC Specialty Mortg. LLC, No. 03-09-00639-CV, 2011 WL 832170, at *4 (Tex. App.-Austin Mar. 11, 2011, no pet.)). The court also noted that Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342 (Tex. 2001), suggests that "the Texas Supreme Court considers liens created in violation of Section 50(a) (6) to be voidable rather than void . . . . " Id. See also Priester, 708 F.3d at 674 ("In Boutari v. JP Morgan Chase Bank N.A., 429 F. App'x 407 (5th Cir. 2011) (per curiam), however, we affirmed a judgment that limitations applies to claims under Section 50(a) (6). In a two-sentence opinion, we said that we had 'determined that the judgment of the district court should be affirmed for essentially the reasons set forth by the district court.' Id. The opinion we affirmed had applied the four-year statute of limitations. See Boutari v. JP Morgan Chase Bank, N.A., 2010 U.S. Dist. LEXIS 144094 (W.D. Tex. June 10, 2010) . If) • 32 See Plaintiff's Answer, Docket Entry No. 13, p. 3. 33 See also Jones v. The Bank of New York Mellon, No. H-13-2414, 2015 WL 300495 (S.D. Tex. Jan. 22, 2015). The plaintiff claimed multiple constitutional violations under art. XVI, § 50 (a) (6), (continued ... ) -10- B. Abandonment When a mortgage or deed of trust containing a power of sale creates a lien on real property, Texas law requires that the lender foreclose no later than four years after the day the cause of action accrues. See Tex. Civ. Prac. & Rem. Holy Cross Church of God in Christ v. (Tex. 2001) Wolf, Code Ann. § 16.035; 44 S.W.3d 562, 567 Once the four-year limitations period expires, the real-property lien and the power of sale to enforce the lien become void. Holy Cross, at 567; 16.035(d)). the (citing Tex. Civ. Prac. & Rem. Code § The borrower's default does not automatically trigger limitations period where election of the note holder. acceleration is optional at Holy Cross, 44 S.W.3d at 566. the The foreclosure cause of action accrues only when the holder actually exercises its acceleration option. Inc., 371 S.W.3d 347, 353 pet.) Id.; Khan v. GBAK Properties, (Tex. App.-Houston [1st Dist.] 2012, no ("If a note secured by a real property lien is accelerated pursuant to the terms of the note, then the date of accrual becomes the date the note was accelerated.") . 33 "Effective acceleration ( • • • continued) including that he did not receive final copies of the loan documents as required by§ 50(a) (6) (Q) (v). Id. at *3. The court held that Texas's residual four-year statute of limitations applied. Id. at *4-5. "Priester controls and binds this Court to conclude that even if the lien were defective (and the Court concludes it was not) when Jones' mortgage was created on June 4, 2003, it became valid as a matter of law when the four-year statute of limitations expired on June 4, 2007 and that [the bank] has the right to foreclose on the Property." Id. at *6-7. -11- requires two acts: ( 1) notice of notice of acceleration." intent to accelerate and Holy Cross, 44 S.W.3d at 566. notices must be 'clear and unequivocal.'" Under Texas law the agreement or actions. parties Khan, can ( 2) "Both Id. abandon acceleration 371 S.W.3d at 356; Clawson v. by GMAC Mortgage, LLC, No. 3:12-CV-00212, 2013 WL 1948128, at *3 (S.D. Tex. May 9, 2013). A lender can unilaterally abandon an acceleration. Leonard v. Ocwen Loan Servicing, L.L.C., 616 F. App'x 677, 680 (5th Cir. 2015) ("Leonard II"); Clawson, 2013 WL 1948128, at *4. For example, " [e] ven when a noteholder has accelerated a note upon default, the holder can to accept payments continues abandon acceleration without available to it upon declared maturity." if exacting the any holder remedies Holy Cross, 44 S.W.3d at 566-67; see also Rivera v. Bank of America, N.A., 607 F. App'x 358, 360-61 (5th Cir. 2015). Statements by either party about the loan's acceleration status can also be "other actions" considered by courts to determine abandonment. (Bankr. W.D. Tex. 2014) Filing a abandonment. In re Rosas, 520 B.R. 534, 539 (citing Khan, 371 S.W.3d at 355). unilateral notice However, of rescission because will parties constitute may abandon acceleration through their actions alone, there is no requirement in Texas that any agreement to abandon acceleration must be in writing or that it is subject to the Statute of Frauds. v. U.S. Bank National Association, -12- No. 01-14-00017-CV, Biedryck 2015 WL 2228447, at *5 (Tex. App.-Houston [1st Dist.] 520 B.R. at 539 May 12, no pet.); In re Rosas, 356). Sending account statements requesting less than the full balance of the accelerated Leonard II, 616 F. App ' x loan at (citing Khan, 2015, can 371 S.W.3d at constitute abandonment. A lender may also abandon 68 0 . acceleration by sending new default notices and notices of intent to accelerate. See Leonard v. Ocwen Loan Servicing, Inc., 2014 WL 4161769, at *4-5 Leonard II, Association, Oct. 29, (S.D. Tex. Aug. 19, 2014) 616 No. 2014) ("Boren II"). F. App'x H-13-2160, ("Boren I"), 677; *4 Khan, 1948128, at *3) must U.S. aff'd, Bank at *1-2 807 F.3d 99 National (S.D. (5th Cir. Tex. 2015) Abandonment "resets" the statute of limitations for (citing longer v. 2014 WL 5486100, the foreclosure cause of action. at Boren ("Leonard I"), aff'd, 371 maturity date. S. W. 3d at 353, and Clawson, 2013 WL (Once "a noteholder abandons acceleration, he no foreclose acceleration."). See Leonard I, 2014 WL 4161769, within four years from the date of Abandonment restores the loan to its original See id. Wheeler argues that "the clock on Defendant's right to bring suit or make a sale [as required by Tex. Civ. Prac. & Rem. Code 16.035] began ticking on October 15, unequivocally accelerated the Loan. 34 Remedies Code 34 § 2008," when § Defendant Texas Civil Practice and 16.035 states (in part) See Plaintiff's Motion, Docket Entry No. 34, p. 7 -13- ~~ 25-27. (a) 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. (b) A sale of real property under a power of sale in a mortgage or deed of trust that creates a real property lien must be made not later than four years after the day the cause of action accrues. Wheeler argues that U.S. Bank's power to foreclose on the Property expired on October 15, 2012, because U.S. Bank never abandoned the 2008 Acceleration. 35 Wheeler advances the same argument regarding the "purported 2009 Acceleration." 36 U.S. Bank argues that the parties' conduct establishes abandonment of the 2008 Acceleration. 37 Specifically, U.S. Bank: (1) accepted payments from Plaintiff; (2) demanded less than the fully matured and accelerated balance of the Mortgage; and (3) re-accelerated the Mortgage. 38 The summary judgment evidence shows that after the 2008 Acceleration, U.S. Bank accepted payments that were less than the full amount due on the Note without exacting remedies available to See id. at 7-12 ~~ 27-40. Wheeler argues that Rule 736 applications are not "suits to foreclose" because they are nonjudicial proceedings. Id. at ~~ 29-30. U.S. Bank does not argue that it filed suit to foreclose within four years of October 15, 2008, but that it abandoned the acceleration by subsequent conduct. See Defendant's Motion, Docket Entry No. 31, p. 10; Defendant's Response, Docket Entry No. 36, pp. 1-2. 35 See Plaintiff's Motion, Docket Entry No. 34, pp. 12-13 ~~ 41-4 5. The discussion regarding abandonment, infra, applies equally to this "purported 2009 acceleration." 36 37 See Defendant's Motion, Docket Entry No. 31, p. 10. 38 See id. at 2-3. -14- it upon declared maturity. 39 Holy Cross, This demonstrates abandonment. 44 S.W.3d at 566; Rivera, 607 F. App'x at 360-61; Snowden, No. H-14-2963, 2015 WL 5123436, at *2-3 31, 2015); Clawson, 2013 WL 1948128, at abandonment. (S.D. Tex. Aug. *3-4. subsequent communications with Wheeler are See U.S. Bank's further evidence of The 2011 Default Notice demands that Wheeler cure her default. 40 It demands less than the entire accelerated balance of the indicating Note, that U.S. Bank was collect the full amount due on the Note. 41 no longer seeking to When Wheeler failed to cure the default, U.S. Bank sent the 2011 Notice of Acceleration, demanding the full amount due on the Note and re-accelerating the Loan. 42 See Cline v. Deutsche Bank National Trust Co., 1565-D, 2015 WL 4041791, at *5 (acceleration can be abandoned by (N.D. Tex. "seeking less July 3:14-CV2, 2015) than the full accelerated amount and mailing new notice-of-intent-to-accelerate 39 See Loan History, Exhibit D to Defendant's Motion, Docket Entry No. 31-2, pp. 2-16; Customer Account Activity Statement, Exhibit 6 to Plaintiff's Motion, Docket Entry No. 34-7. 40 See 2011 Notice of Default, Exhibit A to Defendant's Docket Entry No. 31-1, p. 2 ("If the default is not cured payment within thirty (30) days of the date of this notice, further notice or demand, the maturity date of the Note accelerated and all sums secured by the Deed of Trust declared to be immediately due and payable."). 41 See id. $49,224,32."). (" [T] he amount required 42 to cure the Motion, by such without will be will be default is 2011 Notice of Acceleration, Exhibit B to Defendant's Motion, Docket Entry No. 31-1, p. 8. -15- letters."); see also Leonard I, 2014 WL 4161769, at *4-5; Boren I, 2 0 14 WL 54 8 61 0 0 , at * 1- 2 . U.S. Bank thus abandoned the 2008 Acceleration by its subsequent actions. Citing Thompson v. Chrysler First Business Credit Corp., 840 S.W.2d 25 (Tex. App.-Dallas 1992, no writ), Wheeler argues that the payments were made by the bankruptcy trustee, and that "[p]ayments accepted in bankruptcy pursuant to compliance with the automatic stay do not equate abandonment. " 43 to waiver of defendant accelerated the plaintiff's defaulted, and the plaintiff foreclosure by defendant. plaintiff argued that because loan after the plaintiff filed Id. at 27. the The Thompson bankruptcy to prevent In the subsequent suit, the defendant accepted payments pursuant to an adequate protection agreement during bankruptcy, it "waived the acceleration and created a duty to re-demand and reId. accelerate" before foreclosing. Fargo Bank, App.-Houston N.A., [1st 01-12-00945-CV, Dist.] Dec. 30, at 30. In Hardy v. 2014 WL 7473762, 2014, no pet.), Wells at *5 (Tex. the court discussed Thompson's holding: Thompson stands for the proposition that when a federal bankruptcy court issues an order of adequate protection pursuant to which the parties enter into a repayment agreement, and the lender accepts payments made pursuant thereto, such payments do not establish that the lender abandoned the acceleration of the Note for purposes of See Plaintiff's Motion, Docket Entry No. 34, p. 11 ~ 35. Presumably Wheeler intended to say "waiver of acceleration," or this statement bolsters U.S. Banks's position. 43 -16- summary judgment. Thompson, 840 S.W.2d at 30-318; see also Khan, 371 S.W.3d at 354 (discussing Thompson). Wheeler has not pointed to any evidence in the summary judgment record that the bankruptcy trustee made these payments or that they were made pursuant to an "adequate protection" agreement. 44 is not the function of the court "[I]t to search the record on the nonmovant's behalf for evidence which may raise a fact issue." Stewart v. U.S. Bank National Association, 707-08 (S. D. Tex. 2015) 107 F. Supp. See 3d 705, (citing Topalian v. Ehrman, 954 F.2d 1125, 1137 n. 30 (5th Cir. 1992)). U.S. Bank also sent another default notice and notice of intent to accelerate after the bankruptcy court dismissed Wheeler's bankruptcy action. 45 that U.S. Bank abandoned the 2008 Acceleration. These actions show See Boren II, 807 F.3d at 104-06. Wheeler also argues that U.S. Bank "should have vacated both orders [granting its request for non-judicial foreclosure under Tex. R. Civ. P. 736] if in fact it did intend to abandon the prior acceleration ( s) of the loan and indicate to Plaintiff that the default was obviated and the contract restored to its original 44 The Customer Account Activity Statement does not say who made the payments. See Exhibit 6 to Plaintiff's Motion, Docket Entry No. 34-7. In fact, there is a column for "Debtor Funds Received" and a column for "Trustee Funds Received." The payments referred to are all in the "Debtor Funds Received" column. 45 See Order Dismissing Case and Establishing Deadline Filing Administrative Claims, supra note 20. -17- for condition If 46 However, Rule 736 is merely a procedural device used to obtain authorization to proceed with the remedy of foreclosure. WL 5123436, Biedryck, 2015 WL 2228447, at *5. at *3, In Snowden, 2015 the court rejected a similar argument. The plaintiff argued that because the defendants obtained an "Order Allowing Foreclosure under Texas Rule of Civil Procedure 736," the defendants could not abandon the acceleration. characterized the Id. The plaintiff defendant's actions in obtaining the order as "remedies that could only have been 'exacted' upon maturity of the loan." Id. The court found that this argument had been rejected by the Houston First Court of Appeals. Id. (citing Biedryck, 2015 WL 2228447, at *5). "A lender may abandon acceleration even after obtaining allowing an order for foreclosure by, for example, accepting payments or entering into a loan modification agreement with the borrower." Id. See also Deutsche Bank National Trust Co. v. Ra Surasak Ketmayura, No. A-14-CV-00931-LY-ML, 2015 WL 3899050, at *7 (W.D. Tex. June 11, 2015) (citing Biedryck, 2015 WL 2228447). Therefore, U.S. Bank was not required to ask the court to vacate its Rule 736 orders in order to abandon acceleration. Texas Civil Practice and Remedies Code § 16. 03 5 gives the lienholder four years after the cause of action accrues to: ( 1) bring suit or foreclose on its real property lieni and (2) sell the 46 11-12 See Plaintiff's Motion, Docket Entry No. 34, p. 12 36-40. ~~ -18- ~ 38i pp. property under its power of sale. Wheeler argues that the power of sale pursuant to any of the purported accelerations has expired Bank has not brought suit and sold the Property. 47 because U.S. Wheeler brought this action on February 26, 2014, thereby staying Defendant's foreclosure. pending 48 Rule 736 application for See Tex. R. Civ. Proc. 736.11(a). non-judicial Wheeler argues that a Rule 736 application for expedited foreclosure is a nonjudicial proceeding, and does not satisfy the first requirement of "bringing suit." 49 However, U.S. Bank satisfied this requirement by filing a counterclaim for judicial foreclosure on October 2, 2014. It filed the counterclaim within the four-year statute of limitations, which began running after the 2011 Acceleration. 50 Boren II, 807 F.3d at 103-04. See The statute of limitations for U.S. Bank to exercise its rights has therefore not expired. 51 47 See id. at 9-10 ~~ 30-32; 12-13 ~~ 41-43. 48 See Petition, Exhibit B-1 to Notice of Removal, Docket Entry No. 1-2, p. 13. ~ 49 See Plaintiff's Motion, Docket Entry No. 34, p. 8 50 See Defendant's Original Counterclaim, Docket Entry No. 12. 51 29. Wheeler also argues that the power of sale has expired even based on the 2011 Acceleration because U.S. Bank did not sell the Property by October 3, 2015. See Plaintiff's Motion, Docket Entry No. 34, p. 13 ~ 43 (citing Tex. Civ. Prac. & Rem. Code § 16.035(b)). U.S. Bank needs a court order to sell the Property, and this action stayed its Rule 736 applications and orders and prevented it from exercising its power of sale. See Tex. Const. art. XVI, § SO(a) (6) (D) (a home equity loan may be foreclosed upon only by court order). "[A]s a general rule, where a person is (continued ... ) -19- C. Judicial Foreclosure To foreclose under a security instrument with a power of sale, Texas law requires existsi § the lender to demonstrate that: (1) a debt (2) the debt is secured by a lien created under Art. XVI, 50 (a) (6) of the Texas Constitutioni (3) plaintiff is in default under the note and security instrumenti and (4) plaintiff received notice of default and acceleration. National Association, See 988 F. Supp. 2d 732, Huston v. 740 U.S. Bank (S.D. Tex. 2013), aff'd, 583 F. App'x 306 (Mem) (5th Cir. 2014), cert. denied, 135 S. Ct. Code Ann. 1718 ( 2 015) i Tex. Prop. summary judgment record, § 51 . 0 0 2 . Based on the as discussed in Section I, supra, the court concludes that these elements have been satisfied and that summary judgment is appropriate for U.S. Bank on its counterclaim for judicial foreclosure. IV. 52 Conclusions and Order For the reasons explained above, summary judgment for U.S. Bank is appropriate because there is no genuine issue of material 51 ( • • • continued) prevented from exercising his legal remedy by the pendency of legal proceedings, the time during which he is thus prevented should not be counted against him in determining whether limitations have barred his right." Jackson v. Johnson, 950 F.2d 263, 265 (5th Cir. 1992) i cf. Ketmayura, 2015 WL 3899050, at *8-9 (finding that "a suit for an injunction against nonjudicial foreclosure does not toll the statute of limitations, because it is no impediment to the lender's ability to sue on the note or seek judicial foreclosure of the property"). 52 p. 4 ~ See Defendant's Original Counterclaim, Docket Entry No. 12, 8i Defendant's Motion, Docket Entry No. 31, pp. 12-14. -20- fact regarding whether the statute foreclosure claim has expired. 53 for Summary Plaintiff's Judgment Cross (Docket Motion for of limitations for its Accordingly, Defendant's Motion Entry No. 31) Summary Judgment Defendant's Motion for Summary Judgment is GRANTED, and and Response to (Docket Entry No. 34) is DENIED. SIGNED at Houston, Texas, on this lOth day of February, 2016. SIM LAKE UNITED STATES DISTRICT JUDGE 53 Wheeler seeks a declaratory judgment. See Amended Complaint, Docket Entry No. 20, p. 5. Wheeler's arguments rely on her statute of limitations claim. "Both Texas and federal law require the existence of a justiciable case or controversy in order to grant declaratory relief." Val-Com Acquisitions Trust v. CitiMortgage, Inc., 421 F. App'x 398, 400 (5th Cir. 2011) (citing Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995)); see also Conrad v. SIB Mortg. Corp., No. 4:14-CV-915-A, 2015 WL 1026159, at *7 {N.D. Tex. March 6, 2015) {"A declaratory judgment action requires the parties to litigate some underlying claim or cause of action."); Elekes v. Wells Fargo Bank, N.A., No. 5:13-CV-89, 2014 WL 2700686 {S.D. Tex. June 11, 2014) {"Declaratory judgment is merely a form of relief that the Court may grant; it is not a substantive cause of action."). Because Plaintiff's claims will be dismissed, her request for declaratory relief has no merit. Wheeler also argues she is "entitled to quiet title because expiration of the four-year statute of limitations renders Defendant's purported lien void." Plaintiff's Motion, Docket Entry No. 34, p. 6 ~ 24. Because the court holds today that the statute of limitations has not expired, this claim likewise has no merit. -21-
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