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Santiago v. Bank of New York Mellon

Court of Appeals of Texas, Fifth District, Dallas

April 11, 2017

LUIS A. SANTIAGO, Appellant
v.
THE BANK OF NEW YORK MELLON, AS SUCCESSOR TRUSTEE TO JPMORGAN CHASE BANK, AS TRUSTEE FOR NOVASTAR MORTGAGE FUNDING TRUST, SERIES 2004-2. NOVASTAR HOME EQUITY LOAN ASSET-BACKED CERTIFICATES, SERIES 2004-2, AND OCWEN LOAN SERVICING, LLC, Appellees

         On Appeal from the 296th Judicial District Court Collin County, Texas Trial Court Cause No. 296-01232-2015

          Before Justices Lang, Brown, and Whitehill.

          MEMORANDUM OPINION

          BILL WHITEHILL JUSTICE.

         This appeal is appellant's fourth trip here regarding this dispute. In this instance, he challenges (i) a summary judgment dismissing his current suit aimed at preventing a foreclosure on his home and awarding appellee its attorney's fees and (ii) an order releasing to the lender funds held in the court's registry pending the borrower's first appeal.[1] As discussed more fully below, we affirm the trial court's judgment because (i) even if the trial court erred in granting the summary judgment or releasing the registry funds, appellant has not shown any resulting harm, (ii) appellant's arguments attacking an order from a prior suit are an impermissible collateral attack on that order, and (iii) the trial did not actually award appellee any attorney's fees.

         I. Background

         A. The Home Equity Loan and Default

         In 2004, Luis Santiago, Borrower, signed a home equity promissory note secured by a first lien on his property. Novastar Mortgage, Inc. was the original lender on the home equity promissory note. The security instrument was granted in Mortgage Electronic Registration Systems, Inc.'s (MERS) favor as nominee for Novastar Mortgage Funding Trust, its successors and assigns. The note and security instrument were subsequently transferred to Bank of New York Mellon (BONY), which retained Ocwen to act as its attorney-in-fact and servicer-in-fact on the loan. We refer to BONY and Ocwen together as "Lender."

         Borrower defaulted on the Note in August 2010, and Lender sent a default notice three months later.

         In May 2011, Lender filed a verified home equity foreclosure application seeking an expedited foreclosure on the home equity loan following Borrower's default. See Tex. R. Civ. P. 736. At that time, the August 2010 payment was past due and Borrower owed Lender $1, 015, 521.31 on the note.

         B. The First Lawsuit

         Lender's Rule 736 proceeding was automatically stayed when Borrower filed a separate lawsuit alleging fraud, and breach of contract claims and a suit to quiet title asserting that the loan was void, illegal, and unenforceable (the First Lawsuit). See Tex. R. Civ. P. 736.11. Lender filed counterclaims against Borrower and asserted third-party claims against his wife, seeking a judgment permitting foreclosure on the property according to the security instrument.

         Lender later moved for and was granted a summary judgment ordering that Borrower take nothing on all claims and that Lender "may conduct a non-judicial foreclosure of the property that is the subject of this cause" (the First Summary Judgment").

         Borrower appealed the First Summary Judgment (the First Appeal), and the trial court entered an "Agreed Order Staying Enforcement of Judgment" (Agreed Order), which stayed the First Summary Judgment's enforcement during the First Appeal if Borrower (i) made monthly $2, 500 payments into the court's registry, (ii) made three month's payments in advance, and (iii) kept the property insured and in good repair. The Agreed Order further provided that the money deposited in the court's registry would be paid to Lender against Borrower's debt if the First Appeal failed. Lender in April 2014 sent Borrower an erroneous foreclosure notice, but Borrower states that he has "forgiven" Lender and does not include this notice as part of the alleged breach.

         While the First Appeal was pending, Lender filed a motion to clarify the Agreed Order regarding the tolling of any limitations periods that might preclude it from exercising its right to foreclose if it did not do so within certain time limits (the Clarification Motion). See Tex. Civ. Prac. & Rem. Code § 16.035(b). Lender argued that the First Summary Judgment gave it an absolute right to foreclose if Borrower's First Appeal failed, but Lender filed the Clarification Motion out of an "abundance of caution" to clarify the parties' intent regarding limitations tolling. Specifically, Lender asked the trial court to clarify that the Agreed Order "includes an implied provision that limitations are tolled during such time as the Agreed Order is in effect."

         The trial court granted Borrower's Clarification Motion on December 17, 2014, but did not explain why or include the requested clarifying language (the Clarification Order). The Clarification Order, however, granted the motion "in its entirety." In a jurisdictional brief to this court in the First Lawsuit, however, Borrower acknowledged that the Clarification Order "mandate[d] that the statute of limitations would be tolled within the contract."

         Borrower challenged the Clarification Order in a mandamus proceeding in this court, which we denied. Borrower then filed an untimely direct appeal (the Second Appeal), which we dismissed for want of jurisdiction.

         In the First Appeal, we affirmed the trial court's First Summary Judgment for Lender. See Santiago v. Novastar Mortg. Inc., 443 S.W.3d 462, 479 (Tex. App.-Dallas 2014, pet. denied) (abrogated by Wood v. HSBC Bank, USA, N.A., 505 S.W.3d 542, 547 (Tex. 2016)). Borrower filed a petition for review, which the supreme court denied in February 2015.

         On March 3, 2015, after the supreme court denied Borrower's petition for review, Lender notified Borrower that it would sell the property on April 7th (the March 2015 Notice). But the April foreclosure did not occur because Lender recognized that Borrower still had time to file a motion for rehearing in the supreme court. Borrower so moved, and rehearing was denied on April 17, 2015.

         C. ...


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