United States District Court, S.D. Texas, Houston Division
MEMORANDUM OPINION & ORDER
H. Miller Judge.
before the court is a memorandum and recommendation
(“M&R”) filed by Magistrate Judge Nancy
Johnson. Dkt. 27. The Magistrate Judge considered a motion
for summary judgment filed by defendant HSBC Bank U.S.A.,
N.A. (“HSBC”) (Dkt. 23), plaintiff Morlock,
L.L.C.'s (“Morlock”) response (Dkt. 25), and
HSBC's reply (Dkt. 26). Having considered the M&R,
the motions, Morlock's objections (Dkt. 28), HSBC's
response (Dkt. 29), and other relevant materials in the
record, the court is of the opinion that Morlock's
objections should be OVERRULED and the M&R should be
ADOPTED IN FULL.
April 2005, George G. George executed an Adjustable Rate Note
(the “Note”) to purchase property located at
17606 Meadow Crossing Lane, Houston, Texas 77095 (the
“Property”) with a loan from People's Choice
Home Loan, Inc. (“People's Choice”). Dkt. 23,
Ex. A-1 at 8-12. The Note was secured by a deed of trust
granting a security interest in the form of a lien on the
Property to People's Choice. Dkt. 23, Ex. A-2 at 14-40.
On December 6, 2007, (but effective as of October 30, 2007),
both the Note and the deed of trust were assigned to HSBC.
See Dkt. 23, Ex. A-3 at 42-43. George defaulted
several times on the Note by failing to make timely payments.
Dkt. 23, Exs. A, A-7. HSBC's loan servicer sent George a
notice of default on September 15, 2012. Dkt. 23, Ex. A-4 at
52-58. On December 6, 2011, Morlock purchased the Property
subject to any existing liens. Dkt. 23, Ex. B-1. On November
29, 2012, after George continued to default on the mortgage,
HSBC's loan servicer sent George a notice of
acceleration, and a notice of sale to take place on January
1, 2013. Dkt. 23, Ex. B-1 at 5-8. On July 10, 2015, HSBC sent
George a notice of rescission of acceleration on the Note.
Dkt. 23, Ex. A-6 at 67-68.
December 2012, Morlock filed suit against HSBC in the 295th
District Court of Harris County, Texas seeking a temporary
restraining order to prevent a sale of the Property and a
determination of HSBC's assignment of the lien and
interest in the Property. Dkt. 23, Ex. B-5. The case was
removed to federal court and Morlock's claims were
dismissed on July 23, 2014, for failure to state a claim.
Dkt. 23, Ex. B-5 at 63-72.
6, 2015, Morlock brought a second suit against HSBC in the
133rd District Court Of Harris County, Texas. Dkt. 1, Ex.
B-1. Morlock requested a temporary restraining order
preventing any action by HSBC and claimed that HSBC's
right to enforce the lien was barred by section 16.035 of the
Texas Civil Practice and Remedies Code. Dkt. 1, Ex. B-1. On
August 11, 2015, HSBC removed this case on the basis of
diversity jurisdiction. Dkt. 1. On August 18, 2015, HSBC
filed a motion to dismiss (Dkt. 3) which the Magistrate Judge
recommended denying on October 21, 2015 (Dkt. 15). The court
adopted the Magistrate Judge's decision on the motion to
dismiss on December 3, 2015. Dkt. 17. On June 10, 2016, HSBC
filed a motion for summary judgment. Dkt. 23. The Magistrate
Judge considered HSBC's motion for summary judgment and
issued an M&R recommending that the court grant
HSBC's motion. See Dkt. 23.
Magistrate Judge's M&R addresses HSBC's motion
for summary judgment (Dkt. 23) along with Morlock's
response (Dkt. 25) and HSBC's reply in support of its
motion for summary judgment (Dkt. 26). Dkt. 27. Morlock
asserts that HSBC did not bring suit for foreclosure on the
lien within four years of accrual of the cause of action as
required by section 16.035 of the Texas Civil Practice and
Remedies Code making the lien void and unenforceable. Dkt.
25. HSBC's motion for summary judgment asserts that the
statute of limitations does not bar foreclosure because HSBC
abandoned all instances of acceleration. Dkt. 23, Exs. A-6,
A-7, A-8. Further, HSBC argued that the evidence shows that
HSBC owns the Note and is the current beneficiary on the deed
of trust because Morlock purchased the Property subject to
any existing liens. Dkt. 23, Ex. B-1 at 6.
Magistrate Judge recommended that the court grant HSBC's
motion for summary judgment (Dkt. 27 at 13) because, while
HSBC exercised its option to accelerate more than four years
ago, HSBC abandoned both instances of acceleration (Dkt. 27
at 12-13). Therefore, HSBC did not have to file a written
extension because it acted to abandon the acceleration within
the four-year statute of limitations. Dkt. 27 at 12. Further,
because Morlock purchased the property at a foreclosure sale
subject to any existing liens, George still owed a debt to
HSBC, and HSBC could foreclose on the property. Dkt. 27 at
13. Morlock filed timely objections to the M&R. Dkt. 28.
HSBC responded to the objections. Dkt. 29.
dispositive matters, the court “determine(s) de novo
any part of the magistrate judge's disposition that has
been properly objected to.” See Fed. R. Civ.
P. 72(b)(3). “The district judge may accept, reject, or
modify the recommended disposition; receive further evidence;
or return the matter to the magistrate judge with
instructions.” Id. “When no timely
objection is filed, the court need only satisfy itself that
there is no clear error on the face of the record in order to
accept the recommendation.” Fed.R.Civ.P. 72(b),
Advisory Comm. Note (1983). For non-dispositive matters, the
court may set aside the magistrate judge's order only to
the extent that it is “clearly erroneous or contrary to
law.” Fed.R.Civ.P. 72(a).
Motion for Summary Judgment
shall grant summary judgment when a “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(c). “[A] fact is genuinely in dispute
only if a reasonable jury could return a verdict for the
non-moving party.” Fordoche, Inc. v. Texaco,
Inc., 463 F.3d 388, 392 (5th Cir. 2006). 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, 106 S.Ct. 2548 (1986). If
the party meets its burden, the burden shifts to the
non-moving party to set forth specific facts showing a
genuine issue for trial. Fed.R.Civ.P. 56(e). The court must
view the evidence in the light most favorable to the
non-movant and draw all justifiable inferences in favor of
the non-movant. Envtl. Conservation Org. v. City of
Dall., Tex., 529 F.3d 519, 524 (5th Cir. 2008).