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Leander v. U.S. Bank, National Association

United States District Court, S.D. Texas, Houston Division

March 27, 2018




         Before the Magistrate Judge upon referral from the District Judge for a memorandum and recommendation is Defendants' Motion for Summary Judgment (Document No. 13). Having considered the motion, the response and additional briefing (Document Nos. 16 & 18), Plaintiffs' claims, the summary judgment evidence, and the applicable law, the Magistrate Judge RECOMMENDS, for the reasons set forth below that Defendants' Motion for Summary Judgment (Document No. 13) be GRANTED.

         I. Background

         This is a mortgage/foreclosure case, which was filed by Plaintiffs Ann and Mark Leander ("the Leanders") in state court on July 20, 2017, against U.S. Bank and Ocwen Loan Servicing, LLC (collectively "Defendants"), seeking to prevent foreclosure and render void the home equity loan on their residence, located at 3207 Cinco Lakes Dr., Katy, Texas 77450 (referred to hereafter as "the Property"). The case was timely removed to this Court on the basis of diversity.

         In the Petition they filed in state court, the Leanders assert claims against Defendants for: (1) a determination that the lien on the Property is unenforceable given the expiration of the statute of limitations; (2) breach of contract; (3) violations of the Texas Constitution; (4) to remove cloud and quiet title to the Property; and (5) declaratory relief. In their Motion for Summary Judgment, Defendants maintain that summary judgment is warranted on all of the Leanders' claims because the statute of limitations has not run on their ability to enforce the lien on the Property, and because the Leanders' complaints about the origination of the loan and any defects associated therewith are both time-barred and refuted by the summary judgment evidence.

         II. Summary Judgment Standard

         Rule 56(a) provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. Civ. P. 56(a). The moving party must initially "demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2553 (1986). Once the moving party meets its burden, the burden shifts to the nonmovant, "who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists" and that summary judgment should not be granted. Norwegian Bulk Transport A/S v. International Marine Terminals Partnership, 520 F.3d 409, 412 (5th Cir. 2008); see also Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998). A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials in a pleading, and unsubstantiated assertions that a fact issue exists will not suffice. Celotex, 106 S.Ct. at 2548. Instead, "the nonmoving party must set forth specific facts showing the existence of a 'genuine' issue concerning every essential component of its case." Morris, 144 F.3d at 380.

         III. Discussion

         A. Statute of Limitations

         In their first claim, titled "Statute-of-Limitations Bars any suit seeking authority to foreclose, " and "Statute-of-Limitations Bars any Power of Sale, " the Leanders allege that U.S. Bank "accelerated the debt on [the] Property in August 2010 when it filed its Application for Foreclosure. However, U.S. Bank did not file its most recent application to foreclose until January 2015, after the four-year statute of limitations [had] expired." Document No. 1 -4 at 5. Defendants, in their Motion for Summary Judgment, argue that summary judgment is warranted on the Leanders' statute of limitations claim because the acceleration of the debt was abandoned by virtue of subsequent Notices of Default, which sought less than the full amount due, and operated to re-set the statute of limitations.

         Section 16.035 of the Texas Civil Practice and Remedies Code, which governs foreclosure proceedings on a real property lien, provides for a four year statute of limitations, as follows:

A person must bring suit for the recovery of real property under a real property lien or the foreclosure of a real property lien not later than four years after the day the cause of action accrues On the expiration of the four-year limitations period, the real property lien and a power of sale to enforce the real property lien become void.

         For a note with an optional acceleration clause, a cause of action accrues under § 16.035 when the "holder actually exercises its option to accelerate" by providing first a notice of intent to accelerate and then a notice of acceleration. Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001). But, "[a] note holder who exercises its option to accelerate may 'abandon acceleration if the holder continues to accept payments without exacting any remedies available to it upon declared maturity.'" Khan v. GBAK Properties, Inc., 371 S.W.3d 347, 353 (Tex. App.-Houston [1stDist. 2012, no pet.) (quoting Holy Cross, 44 S.W.3d at 566-67). Acceleration may also "be abandoned by agreement or other action of the parties, " with there being no requirement of a written agreement. Khan, 371 S.W.3d at 353, 356; see also Clawson v. GMAC Mortgage, LLC, No. 3:12-CV-00212, 2013 WL 1948128 * 4 (S.D. Tex. May 9, 2013) (Texas law "does not preclude a note holder from abandoning acceleration without express agreement from the borrower."). In addition, abandonment may be unilateral and far from express. "For example, a lender may abandon acceleration by sending new notices of default and intent to accelerate demanding less than the full balance of the loan." Curry v. Ocwen Loan Servicing, LLC, Civil Action No. H-15-3089, 2016 WL 3920375 * 5 (S.D. Tex. July 14, 2015) (Lake, J.) (citing Leonard v. Ocwen Loan Servicing, Inc., Civ. Action No. H-13-3019, 2014 WL 4161769 at *4-5 (S.D. Tex. Aug. 19, 2014) (Leonard I), aff'd, Leonard II, 616 Fed.Appx. 677; Boren v. U.S. Bank Nat'l Assoc, Civ. Action No. H-13-2160, 2014 WL 5486100 at *l-2 (S.D. Tex. Oct. 29, 2014), aff'd, 807 F.3d 99 (5th Cir. 2015)). When abandonment of acceleration occurs, "the statute of limitations period under § 16.035(a) cease[s] to run ... and a new limitations period [] begins." Boren v. U.S. Nat'l Bank Ass'n, 807 F.3d 99, 106 (5th Cir. 2015).

         Here, the summary judgment evidence shows that U.S. Bank, National Association, as Trustee for Asset Backed Securities Corporation Home Equity Loan Trust, Series 2005-HE2, filed an Application for Order of Foreclosure in the 268th District Court of Fort Bend County, Texas, on August 25, 2010. (Document No. 13-9). On October 4, 2012, before that state court action was dismissed without prejudice for want of prosecution, a Notice of Default was sent to the Leanders advising them that they were in default and setting forth the amount they would have to pay to bring their loan current (Document No. 13-1 at 16). Two years later, on November 4, 2014, a subsequent Notice of Default was sent to the Leanders advising them that the loan was in default and setting forth the amount they would have to pay to bring the loan current (Document No. 13-2 at 8). Those two Notices of Default operated as an abandonment of the prior acceleration of the Note, an abandonment of the foreclosure proceeding, and a re-setting the four year statue of limitations under § 16.035 of the Texas Civil Practice and Remedies Code. See Boren v. U.S. Nat'lBank Ass 'n, 807 F.3d 99, 106 (5th Cir. 2015) ("U.S. Bank's Second Notice of Default informed the Borens that the total amount necessary to bring their loan current was the amount due under the original terms of the Note and that the bank would accelerate the maturity date of the loan if the Borens failed to pay this amount. This notice unequivocally manifested an intent to abandon the previous acceleration and provided the Borens with an opportunity to avoid foreclosure if they cured their arrearage. As a result, the statute of limitations period under § 16.035(a) ceased to run at that point and a new limitations period did not begin to accrue until the Borens defaulted again and U.S. Bank exercised its right to accelerate thereafter."); Martin v. Federal Nat'lMortgage Ass 'n,814 F.3d 315, 318 (5thCir. 2016) ("As is relevant here, the request for payment of less than the full obligation - after initially accelerating the entire obligation - was an unequivocal expression of the bank's intent to abandon or waive its initial acceleration."); Alvarado v. U.S. Bank Nat'l Ass'n,652 Fed.Appx. 305, 307 (5th Cir. 2016) ("Because U.S. Bank sent Alvarado 'account statements listing less than the full accelerated debt, as well as notices of default and acceleration, after the October 2008 acceleration' the district court did not err in granting summary judgment for U.S. Bank."); Alcala v. DeutscheBank Nat'l Trust Co., Civil Action No. H-15-3627, 2016 WL4363403*3 (S.D.Tex. Aug. 15, ...

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