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Powell v. CIT Bank, N.A.

Court of Appeals of Texas, Fourteenth District

June 8, 2017

AMY POWELL, Appellant
v.
CIT BANK, N.A., F/K/A/ ONEWEST BANK, N.A., F/K/A ONEWEST BANK FSB, Appellee

         On Appeal from the 80th District Court Harris County, Texas Trial Court Cause No. 2013-44752

          Panel consists of Chief Justice Frost and Justices Boyce and Christopher.

          SUBSTITUTE OPINION [1]

          Kem Thompson Frost Chief Justice

         This appeal arises out of a dispute between a property owner and a bank seeking to foreclose its lien on the property. The bank's assignor acquired the lien in a reverse-mortgage transaction. The borrower later died. After his death, the property was transferred. The property owner asserted that the statute of limitations barred the bank's foreclosure action. On appeal, the property owner asserts that the trial court erred in granting declaratory relief that the bank is entitled to foreclose based on a theory that the bank abandoned its purported acceleration of the promissory note, thereby resetting the accrual date for the claim. We conclude that the trial court erred in granting declaratory relief because the claim accrued when all outstanding principal, accrued interest, and other charges became immediately due and payable upon the borrower's death, without any ability of the creditor to accelerate the debt. We reverse the portions of the trial court's judgment in which the trial court granted declaratory relief and dismissed as moot the bank's alternative quantum-meruit claim, and we affirm the remainder of the judgment. We render judgment denying the bank's requests for declaratory judgment, and we remand the bank's quantum-meruit claim.

         I. Factual and Procedural Background

         Patricia Siegel conveyed her interest in real property located at 11919 Cypress Park Drive, Houston, Texas (the "Property") to her husband, Irving Siegel, in July 2005, through a warranty deed. Irving obtained a reverse-mortgage loan in the amount of $273, 079.50 from Financial Freedom Senior Funding Corporation ("Loan"). In connection with the Loan, Irving executed a promissory note in that amount ("Note"), secured by a Deed of Trust in which he granted a lien against the Property to Financial Freedom as security for repayment of the Note. Financial Freedom assigned the Note and Deed of Trust to appellee/defendant CIT Bank N.A., f/k/a OneWest Bank, N.A., f/k/a OneWest Bank, FSB ("CIT Bank"). Irving died in May 2008. Under the Note and Deed of Trust, all outstanding principal, accrued interest, and other charges became immediately due and payable when Irving died.

         Upon Irving's death in May 2008, title to the Property vested in his wife Patricia. Several months later, in September 2008, Financial Freedom sent a notice to Irving's estate, stating that the entire amount of the debt was due and payable because of Irving's death. The debt was not paid. In February 2009, Financial Freedom sent a letter to Irving's estate stating its intention to foreclose its lien on the Property. Over a year later, Patricia deeded her interest in the Property to appellant/plaintiff Amy Powell. Powell has not paid any entity any amount owing on the Note, nor has she paid taxes on the Property or insured the Property at any time.

         CIT Bank filed suit against Powell in June 2011, seeking a declaratory judgment to reform the legal description in the Deed of Trust due to mutual mistake and to divest Irving's estate and his heirs of right, title, and interest in the Property. Powell filed a counterclaim against CIT Bank. Nearly two years later, in May 2013, CIT Bank and Powell signed a mutual motion for nonsuit. In it, CIT Bank states that it "no longer desires to pursue its claims, " and Powell states that Powell "no longer desires to pursue her claims for affirmative relief" against CIT Bank. A few months later, in July 2013, Powell filed suit in this case against CIT Bank seeking to enjoin CIT Bank from foreclosing on the Property in the future. CIT Bank filed a counterclaim, seeking a declaratory judgment that:

(1) the Loan is a valid and enforceable contract;
(2) CIT Bank performed all of its obligations under the Loan;
(3) Powell and/or her predecessor in title failed to perform all of her obligations under the Loan;
(4) Powell's failure to pay the taxes and insurance on the Property constitutes a material breach of the terms of the Loan;
(5) Powell has not discharged the total balance of the Loan;
(6) CIT Bank is entitled to foreclose the Deed of Trust and sell the Property at a non-judicial foreclosure sale upon providing proper notice; and
(7) upon foreclosure, CIT Bank is entitled to possession of the Property within thirty days after the sale if CIT Bank purchases the Property.

         In the alternative, CIT Bank sought judicial foreclosure and a writ of possession or ...


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