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Jatera Corp. v. U.S. Bank National Assoc.

United States District Court, N.D. Texas, Dallas Division

September 7, 2017

JATERA CORP., et al., Plaintiffs,
U.S. BANK NATIONAL ASSOC., et al., Defendants.



         Before the Court are: (1) Plaintiffs' Motion for Summary Judgment (Doc. No. 22); and (2) Defendants' Motion for Summary Judgment (Doc. No. 38). After careful consideration of the competing motions, the responses, the replies, the supporting appendices and the applicable law, the Court DENIES Plaintiffs' motion and GRANTS Defendants' motion.

         I. Factual and Procedural Background

         This case arises from foreclosure proceedings related to the real property located at 2207 Trinidad Drive, Dallas, Texas 75232 (“the Property”). The Property was purchased in May 2005 by Marvin Wooten through the signing of a Texas Home Equity Fixed/Adjustable Rate Note (“the Note”) in the amount of $99, 200.00. To secure payment on the Note, both Mr. Wooten and his wife, Esther Wooten (referred to in Court documents as “Esther Moore”, her newly married name), signed a Texas Home Equity Security Instrument (“the Security Instrument”). U.S Bank National Association (“U.S. Bank”), as Trustee for the Registered Holders of Citigroup Mortgage Loan Trust, Asset-Backed Pass-Through Certificates, Series 2005-HE3, then became the owner and holder of the Note and Security Interest. After Mr. Wooten passed away in April 2008, his children transferred their interest in the Property to Ms. Wooten. Shortly thereafter, Ms. Wooten fell behind on her mortgage payments, and in March 2010, U.S. Bank's then-loan servicer, BAC Home Loans Servicing, notified her of its intent to accelerate the Note (“the March 2010 Acceleration”).

         In an effort to obtain a court order permitting foreclosure on the Property, U.S. Bank filed an action in state court, to which Ms. Wooten ultimately consented when she signed an Agreed Final Judgment in November 2011. Around January 2012, Ms. Wooten moved out of the Property and signed a one-year lease at the Potter's House apartments. Ms. Wooten claims she took such action in reliance on the March 2010 Acceleration and Defendants' steadfast pursuit of foreclosure.

         In November 2012, U.S. Bank's new loan servicer, Select Portfolio Servicing, Inc. (“SPS”) sent a new Notice of Default to Ms. Wooten, informing her that she could cure her default by making a payment of $38, 343.99. The Notice further stated that if no payment was received by December 2012, the Note would be re-accelerated. While no payment was made, receipt of this notice and other requests for payment from SPS was confirmed by Ms. Wooten's correspondence to the judge that had presided in the state court foreclosure proceeding. In March 2015, Ms. Wooten conveyed her interest in the Property to ScoJo Solutions, LLC (“ScoJo”) through a Special Warranty Deed executed in March 2015, as evidenced by the document itself. One month later, ScoJo transferred its interest in the Property to Jatera Corporation (“Jatera”).

         After SPS re-initiated foreclosure proceedings, Jatera filed its Original Petition against U.S. Bank and SPS (collectively “Defendants”) in state court, seeking a judgment declaring that the lien on the Property is void because Defendants failed to initiate foreclosure proceedings within the four-year limitations period. Defendants removed the case to federal court on the basis of diversity jurisdiction. Thereafter, Jatera filed an amended complaint seeking the same declaratory relief, but included the assertion that Ms. Wooten's detrimental reliance on the acceleration prevented Defendants from attempting to abandon the acceleration in November 2012. After Ms. Wooten was added as a plaintiff, she filed a complaint seeking a judgment declaring Defendants' lien on the Property null and void and/or quieting title in Jatera's name, also on the grounds that Defendants failed to foreclose on the Property within the four-year limitations period. Plaintiffs also seek actual damages, court costs, and attorney's fees. Both parties have moved for summary judgment on all claims.

         II. Legal Standard

         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); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Whether a fact is “material” is determined by the substantive law governing the dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A party moving for summary judgment has the initial burden of “informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate the absence of a genuine issue of material fact.” Celotex, 477 U.S. at 323. Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to “come forward with specific facts showing that there is a genuine issue for trial.” Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.'” Id. (citation omitted). “[U]nsubstantiated assertions, improbable inferences, and unsupported speculation are not sufficient to defeat a motion for summary judgment.” Nuwer v. Mariner Post-Acute Network, 332 F.3d 310, 313 (5th Cir. 2003). Nevertheless, when ruling on a motion for summary judgment, the court is required to view all facts and inferences in the light most favorable to the nonmoving party and resolve all disputed facts in favor of the nonmoving party. Matsushita, 475 U.S. at 587.


         Defendants move for summary judgment on both Ms. Wooten's and Jatera's claims on the grounds that the statute of limitations did not expire because U.S. Bank abandoned the March 2010 Acceleration when it demanded that Ms. Wooten pay less than the total amount owed in November 2012. Defendants further argue that under Texas law no detrimental reliance exception exists to a lender's ability to unilaterally abandon acceleration, and that even if it did, Ms. Wooten did not detrimentally rely on the March 2010 Acceleration. As to Ms. Wooten's claims, Defendants argue summary judgment is appropriate because: (1) she has no interest in the Property, and therefore lacks standing; and (2) given her execution of the Agreed Judgment, she is prevented from bringing her claims by estoppel based in law, estoppel, and waiver. Regarding Jatera's claim, Defendants argue summary judgment is warranted because Jatera took title to the Property subject to the recorded deed of trust. Additionally, Defendants claim that Jatera cannot use the detrimental reliance of another party, in this case Ms. Wooten, to establish its superior title. Lastly, Defendants argue that Plaintiffs' request for actual damages and attorneys' fees fails because attorneys' fees are not permitted under the federal Declaratory Judgment Act, and Plaintiffs' claims for declaratory relief to do provide support for a claim for actual damages.

         In response, Plaintiffs contend that Texas law prohibits a lender from unilaterally abandoning acceleration of a note if the borrower detrimentally relies on the acceleration. Specifically, because Ms. Wooten detrimentally relied on the March 2010 Acceleration, Plaintiffs argue that Defendants were estopped from abandoning the acceleration and required to foreclose on the Property in March 2014, which they failed to do. As for Ms. Wooten's claims, Plaintiffs maintain that she has standing because she “maintains rights to the property by virtue of the agreement between the parties.” In support of this argument, Plaintiffs note that: (1) Ms. Wooten warranted title when she transferred the Property; and (2) the parties agreed to re-convey the Property to Ms. Wooten if this lawsuit fails, or pay her consideration if the lawsuit succeeds. Plaintiffs also argue that Rule 736.9 of the Texas Rules of Civil Procedure prevents Defendants from using the Agreed Judgment for estoppel or waiver purposes. Regarding Jatera's claims, Plaintiffs argue that because Defendants failed to foreclose on the Property within the limitations period, the lien was already invalidated when it was transferred to ScoJo in March 2015. Additionally, Plaintiffs contend that Ms. Wooten assigned her claims to Jatera, and therefore, Jatera may assert Ms. Wooten's detrimental reliance as its own. Plaintiffs concede, however, that attorneys' fees are not recoverable in this lawsuit.

         A. Ms. Wooten's Claims

         1. ...

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