United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
A. FITZWATER, UNITED STATES DISTRICT JUDGE.
action seeking declaratory relief, to quiet title, and a
permanent injunction, defendant Deutsche Bank National Trust
Company, as Trustee for HSI Asset Securitization Corporation
2006-OPT2, Mortgage Pass-Through Certificates, Series
2006-OPT2 (“Deutsche Bank”), moves for summary
judgment on all claims. For the reasons that follow, the
court grants Deutsche Bank's motion and dismisses this
action with prejudice by judgment filed today.
plaintiffs Sweet Aster Reddick and Bessie L. Reddick (the
“Reddicks”) obtained a Texas home equity loan
from Alpha Mortgage USA, Inc. The loan was secured by a lien on
the Reddicks' residential property located in Dallas (the
“Property”). The loan and lien (collectively, the
“Mortgage”) were later assigned and transferred
to Deutsche Bank.
Reddicks made consistent payments on the Mortgage until 2009,
when they experienced financial hardship. Pursuant to the
optional acceleration clause in the security agreement, which
gives the lender the right to sell the Property if the
borrower fails to cure a default,  Deutsche Bank sent the
Reddicks a Notice of Default and Intent to
Accelerate.On May 24, 2011 Deutsche Bank accelerated
the debt, and on June 20, 2011 Deutsche Bank attempted to
exercise its power of sale under the Mortgage by applying for
an order allowing it to foreclose on the Property pursuant to
Tex.R.Civ.P. 736. This foreclosure proceeding was dismissed
on December 12, 2011, after the Reddicks filed a separate
foreclosure prevention lawsuit against Deutsche Bank on
October 20, 2011. The lawsuit eventually was dismissed with
prejudice on September 9, 2014.
Reddicks remained in default after the dismissal of the
lawsuit, and, on June 8, 2015, Deutsche Bank sent them a new
Notice of Default and Intent to Accelerate. Deutsche Bank
sent another notice of acceleration on September 14, 2015. On
November 10, 2015 Deutsche Bank filed another Rule 736
proceeding. This suit was abated when the Reddicks filed the
present lawsuit in Texas state court, and the Rule 736
proceeding was ultimately dismissed on February 29, 2016.
8, 2016 Deutsche Bank removed the instant case to this court.
In this lawsuit, the Reddicks seek a declaration that
Deutsche Bank's lien on the Property is void, to quiet
title to the Property, and a permanent injunction. All three
claims rely on the Reddicks' contention that Deutsche
Bank's lien on the Property is void due to the expiration
of the statute of limitations. Deutsche Bank moves for
summary judgment dismissing all of the Reddicks' claims.
The Reddicks oppose the motion.
Bank moves for summary judgment on claims for which the
Reddicks will have the burden of proof at trial. Because the
Reddicks will have the burden of proof, Deutsche Bank's
burden at the summary judgment stage is to point the court to
the absence of evidence of any essential element of the
Reddicks' claim. See Celotex Corp. v. Catrett,
477 U.S. 317, 323 (1986). Once it does so, the Reddicks must
go beyond their pleadings and designate specific facts
demonstrating that there is a genuine issue for trial.
See Id. at 324; Little v. Liquid Air Corp.,
37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). An
issue is genuine if the evidence is such that a reasonable
jury could return a verdict in the Reddicks' favor.
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). The Reddicks' failure to produce proof as to
any essential element of a claim renders all other facts
immaterial. TruGreen Landcare, L.L.C. v. Scott, 512
F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary
judgment is mandatory where the Reddicks fail to meet this
burden. Little, 37 F.3d at 1077.
as here, the proper resolution “turns on the
interpretation of Texas law, ‘[this court is] bound to
apply [Texas] law as interpreted by the state's highest
court.'” Am. Int'l Specialty Lines Ins. Co.
v. Rentech Steel L.L.C., 620 F.3d 558, 564 (5th Cir.
2010) (second brackets in original) (quoting Barfield v.
Madison Cnty., Miss., 212 F.3d 269, 271-72 (5th Cir.
2000)). Under Texas law, a home equity loan may only be
foreclosed upon by a court order. See Tex. Const.
Ann. Art. XVI, § 50(a)(6)(D). When a lender exercises
its power of sale granted in a mortgage, Rule 736 provides
the procedure for obtaining a court order. See Tex.
R. Civ. P. 735.1. Lenders may opt instead to pursue an order
by judicial foreclosure. See Tex. R. Civ. P. 735.3
(“A Rule 736 order is not a substitute for a judgment
for judicial foreclosure, but any loan agreement, contract,
or lien that may be foreclosed using Rule 736 procedures may
also be foreclosed by judgment in an action for judicial
sale of real property under a power of sale in a mortgage or
deed of trust that creates a real property lien” must
take place within four years after the day the cause of
action accrues. Tex. Civ. Prac. & Rem. Code Ann. §
16.035(b) (West 2017). When this four-year period expires,
“the real property lien and a power of sale to enforce
the real property lien become void.” Id. at
§ 16.035(d); Cline v. Deutsche Bank Nat'l Tr.
Co., 2015 WL 4041791, at *5 (N.D. Tex. July 2, 2015)
(Fitzwater, J.) (citing Khan v. GBAK Props., Inc.,
371 S.W.3d 347, 353 (Tex. App. 2010, no pet.)). If a
noteholder has the option to accelerate, then the date of
accrual is the date the noteholder exercises the option.
Khan, 371 S.W.3d at 353 (citing Holy Cross
Church of God in Christ v. Wolf, 44 S.W.3d 562, 566
(Tex. 2001)). Although accrual is a legal question,
“whether a holder has accelerated a note is a fact
question.” Cline, 2015 WL 4041791, at *5
(quoting Holy Cross, 44 S.W.3d at 568).
material facts in this case are largely undisputed, and the
parties focus instead on the legal issue of tolling. Neither
side disputes that the Reddicks' claims accrued when
Deutsche Bank accelerated the loan on May 24, 2011. The
Reddicks maintain that Deutsche Bank exercised its option to
accelerate the debt on May 24, 2011, that the statute of
limitations expired on May 24, 2015, and that the lien is
void. Deutsche Bank primarily contends the statute of
limitations was tolled when the Reddicks filed the two
lawsuits because it could not foreclose under Rule 736 while
the lawsuits were pending. The Reddicks maintain that because
Deutsche Bank could ...