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Ocwen Loan Servicing, L.L.C. v. Berry

United States Court of Appeals, Fifth Circuit

March 29, 2017

OCWEN LOAN SERVICING, L.L.C., Plaintiff - Appellee
v.
ROBERT M. BERRY, Defendant-Appellant

         Appeal from the United States District Court for the Northern District of Texas

          Before STEWART, Chief Judge, and KING and DENNIS, Circuit Judges.

          KING, Circuit Judge

         This case concerns a dispute between a borrower and lender over a home equity loan. The lender filed this lawsuit seeking a judgment allowing it to foreclose, and the borrower asserted affirmative defenses and a counterclaim alleging numerous violations of the Texas Constitution's home equity loan provisions. The district court granted summary judgment for the lender, finding, inter alia, that the borrower's affirmative defenses and counterclaim alleging violations of the Texas Constitution's home equity loan provisions were barred by a four-year statute of limitations. Finding that the application of a four-year statute of limitations was in error, we VACATE and REMAND.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         In 2007, Defendant-Appellant Robert Berry took out a loan from Overland Mortgage, L.P. that was secured by a lien on his home. Plaintiff- Appellee Ocwen Loan Servicing, L.L.C. eventually acquired Overland's interest in the loan. In 2010, a Notice of Default and Intent to Accelerate was sent to Berry following missed payments. In June 2013, a Notice of Acceleration was sent to Berry after he failed to cure the default.

         In September 2014, Ocwen filed its original complaint in this action, seeking a judgment allowing it to foreclose on the property. In November 2014, Berry filed his answer, which included as an affirmative defense the allegation that Ocwen's security interest is unenforceable because there were multiple violations of Article 16, section 50(a)(6) of the Texas Constitution. In May 2015, Ocwen filed its first amended complaint (FAC), adding, inter alia, a cause of action for equitable subrogation and asserting that Berry's affirmative defense alleging violations of the Texas Constitution was barred by the statute of limitations.

         Berry filed an answer and counterclaim to the FAC the next month, asserting once again the affirmative defense that Ocwen's security interest is unenforceable due to violations of section 50(a)(6) of the Texas Constitution and adding a counterclaim that "[t]he extension of credit was made in violation of the Texas Constitution for the reasons reflected in Affirmative Defenses and the alleged lien is invalid on its face." In its answer to the counterclaim, Ocwen asserted, inter alia, that Berry's allegations were "barred, in whole or in part, by the applicable statute of limitations. In particular, his Counterclaim was filed more than four years after the closing of the subject loan and his Counterclaim is subject to a four-year limitations period." Berry then filed a first amended answer and counterclaim, adding more detail and allegations to the affirmative defense and slightly changing the wording of the counterclaim.[1]In its amended answer to the counterclaim, Ocwen once again asserted that Berry's claims were barred by the statute of limitations.

         In August 2015, Ocwen and Berry each moved for summary judgment. The district court granted Ocwen's motion for summary judgment and denied Berry's motion for summary judgment. In relevant part, the district court found that Ocwen had cited to evidence in support of its assertions that it was the owner of the loan and had followed the proper procedures to foreclose on the property. The district court then recognized that-rather than respond to or dispute this evidence-Berry instead argued that the loan was invalid because of numerous alleged violations of the Texas Constitution committed by Ocwen's predecessor in interest during the closing of the loan. Berry had argued that, although Fifth Circuit precedent would normally apply a four-year statute of limitations to his constitutional arguments had he filed the lawsuit, his arguments were raised as affirmative defenses and as a counterclaim. Therefore, according to Berry, they were timely under Tex. Civ. Prac. & Rem. Code § 16.069, [2] and alternatively, under the theory of recoupment. The district court held, however, that the alleged violations of the Texas Constitution were barred by a four-year statute of limitations, rejecting Berry's argument that he could rely on section 16.069 to avoid the statute of limitations. The district court explained that, although it was unclear whether Berry, a counterclaimant, was required to specifically reference section 16.069 in his counterclaim, Berry not only had failed to cite section 16.069 in his amended counterclaim, but he also had failed to mention avoidance of the statute of limitations in theory. Accordingly, the district court held that Berry's argument in reliance on section 16.069 was waived because he was required to, at the very least, affirmatively plead his theory of avoidance regarding the statute of limitations.

         Berry then filed a motion for reconsideration. Treating Berry's motion as a motion to alter or amend the judgment under Federal Rule of Civil Procedure 59(e), the district court denied the motion.

         Berry timely filed a notice of appeal.

         II. STANDARD OF REVIEW

         We review "[a] grant of summary judgment . . . de novo, applying the same standard on appeal that is applied by the district court." Tiblier v. Dlabal, 743 F.3d 1004, 1007 (5th Cir. 2014) (quoting Coliseum Square Ass'n v. Jackson, 465 F.3d 215, 244 (5th Cir. 2006)). Summary judgment is appropriate "if 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). We also review "a ...


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