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Windsor Mortgage Holdings Limited, LLC v. Pyron

United States District Court, S.D. Texas, Corpus Christi Division

April 25, 2018

BRENDA S PYRON, et al, Defendants.



         Plaintiff Windsor Mortgage Holdings Limited, LLC (Windsor) filed this action against Defendants Brenda S. Pyron and Dennis L. Pyron (the Pyrons) seeking to recover on a defaulted home equity loan through foreclosure of the lien securing the debt. Windsor has filed its motion for summary judgment (D.E. 25) seeking to eliminate the Pyrons' affirmative defenses and to prove up the note, Windsor's status as holder, the Pyrons' default, the liquidated amount owed, and the right to foreclose. The Pyrons have filed their motion for summary judgment (D.E. 26) seeking to bar Windsor's claim on the basis of limitations and claiming that Windsor has no evidence to establish the amount due. For the reasons set out below, the Court GRANTS IN PART AND DENIES IN PART Windsor's motion (D.E. 25) and DENIES the Pyrons' motion (D.E. 26) in its entirety.


         Other than the calculation of the amount owed and the Pyrons' actual receipt of correspondence, the facts are largely undisputed. Objections to certain evidence will be addressed in the Discussion section.

         The Pyrons executed a note in the original principal amount of $20, 000, payable to GMAC Mortgage, LLC d/b/a DiTech (GMAC), on or about November 16, 2005. D.E. 25-1, pp. 9-12. GMAC endorsed the note in blank and Windsor is now owner as bearer, with physical possession of the note. On the same date of the note's execution, and to secure its repayment, the Pyrons signed a Closed End Deed of Trust granting GMAC a lien on their residence at 210 Santa Monica Street, Portland, Texas. D.E. 25-1, pp. 14-20. Through a series of assignments, Windsor is now the beneficiary of the Deed of Trust, with the right to enforce it according to its terms. D.E. 25-1, pp. 22-38.

         After making payments through June 1, 2011, the Pyrons defaulted on their obligation to make any further payments on the note. On three occasions (January 4, 2010, May 7, 2010, and October 6, 2011), the Pyrons were sent letters giving them notice of default and intent to accelerate the indebtedness. D.E. 25-1, pp. 48-55. On December 1, 2011, attorneys representing GMAC's interests sent the Pyrons a notice of acceleration demanding payment of the full amount due, plus interest and fees in the total amount of $35, 483.64. D.E. 25-1, pp. 60-63.

         On or about January 30, 2012, the Pyrons hired the Litvin Law Firm, PC to represent their interests. D.E. 25-1, p. 72 (Cease and Desist Notice). On February 10, 2012, GMAC gave notice to both the Litvin Law Firm and to the Pyrons that it would, thereafter, communicate regarding the Pyrons' account only with that law firm. The communications would include telephone calls, emails, and all written correspondence, including the Pyrons' monthly account statements. This recognition that the Pyrons were represented by counsel would continue unless or until they notified GMAC in writing that the representation had terminated. D.E. 25-1, pp. 70-71.

         The Pyrons did not pay the accelerated amount due. On August 27, 2012, GMAC filed a petition for judicial foreclosure in the 36th Judicial District Court of San Patricio County, Texas under Cause No. S-12-5757CV-A. D.E. 25-1, p. 133. However, on January 11, 2013, GMAC filed a nonsuit without prejudice, terminating the judicial foreclosure action. D.E. 25-1, p. 67. Immediately thereafter, it sent a monthly statement, dated January 15, 2013, to the Pyrons through the Litvin Law Firm. D.E. 25-1, pp. 74-76. That statement reflected that the total amount due was $9, 003.32, as of the due date of July 1, 2011-when the Pyrons ceased making payments.

         Similar statements followed, dated February 15, 2013, March 15, 2013, April 15, 2013, May 15, 2013, June 17, 2013, September 16, 2013, October 15, 2013, and November 15, 2013. D.E. 25-1, pp. 79-117. Each claimed a greater amount due than the last. But to cure the default and bring the account current, they all demanded less than the total principal balance listed and substantially less than the full accelerated balance of the note would have been. Starting on December 16, 2013, similar notices were sent to the Pyrons by way of the Litvin Law Firm by Ocwen Loan Servicing, LLC. D.E. 25-1, pp. 119-23 (including statement of January 15, 2014). Throughout this time, the Litvin Law Firm continued to represent the Pyrons. D.E. 25-1, p. 138.

         On November 10, 2016, Windsor's attorneys sent notice of default and intent to accelerate to the Pyrons at their own residence address. D.E. 25-1, pp. 57-58. The amount owed to cure default was listed as $17, 634.65. On December 13, 2016, Windsor's counsel sent to the Pyrons' residence address a notice of acceleration of loan maturity, reflecting that all unpaid principal and accrued interest was due and directing the Pyrons to contact the firm for the total amount. D.E. 25-1, p. 128. On May 18, 2017, Windsor filed this action. D.E. 1.

         Dennis Pyron admitted in his deposition that the Pyrons have made no payments on this debt since the loan went into default in 2011. D.E. 25-1, p. 139. In his summary judgment affidavit, however, Dennis Pyron claims that he made attempts to resolve this matter, modify the loan, and make payments, but that Windsor and its predecessors in interest refused those efforts. D.E. 26, p. 5. He further claims that he did not receive any statements or correspondence after the December 1, 2011 acceleration. The Pyrons' current attorney, Lynda S. Ladymon, testified that she occasionally inquired of the Pyrons' previous counsel if they had any correspondence on the account and they indicated that they had not received any communications from Windsor's predecessors in interest. D.E. 29-3.

         Windsor now claims that the Pyrons owe $75, 538.05 as of January 30, 2018, and that the debt continues to accrue interest. D.E. 25-1, pp. 130-31. That calculation reflects $35, 173.70 in principal, $21, 884.27 in interest, $8, 082.03 in property taxes, and $10, 398.05 in attorney's fees and expenses.


         A. Standard of Review

         Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A genuine issue exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court must examine “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52. In making this determination, the Court must consider the record as a whole by reviewing all pleadings, depositions, affidavits, and admissions on file, and drawing all justifiable inferences in favor of the party opposing the motion. Caboni v. Gen. Motors Corp., 278 F.3d 448, 451 (5th Cir. 2002).

         The Court may not weigh the evidence or evaluate the credibility of witnesses. Id. Furthermore, “affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.” Fed.R.Civ.P. 56(e); see also Cormier v. Pennzoil Exploration & Prod. Co., 969 F.2d 1559, 1561 (5th Cir. 1992) (per curiam) (refusing to consider affidavits that relied on hearsay statements); Martin v. John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir. 1987) (per curiam) (stating that courts cannot consider hearsay evidence in affidavits and depositions). Unauthenticated and unverified documents do not constitute proper summary judgment evidence. King v. Dogan, 31 F.3d 344, 346 (5th Cir. 1994) (per curiam).

         The moving party bears the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party demonstrates an absence of evidence supporting the nonmoving party's case, then the burden shifts to the nonmoving party to come forward with specific facts showing that a genuine issue for trial does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). To sustain this burden, the nonmoving party cannot rest on the mere allegations of the pleadings. Fed.R.Civ.P. 56(e); Anderson, 477 U.S. at 248. “After the nonmovant has been given an opportunity to raise a genuine factual issue, if no reasonable juror could find for the nonmovant, summary judgment will be granted.” Caboni, 278 F.3d at 451.

         The evidence must be evaluated under the summary judgment standard to determine whether the moving party has shown the absence of a genuine issue of material fact. “[T]he substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248.

         B. Narrowing of Issues

         The Pyrons pled the following as affirmative defenses: limitations; failure to mitigate damages; illegality; no damages; unconscionability; unclean hands; violation of the Texas Constitution; and lack of subject matter jurisdiction. D.E. 16. The Court previously rejected the jurisdictional issue finding that the amount in controversy requirement for diversity jurisdiction has been met. D.E. 15. Limitations and damages are addressed below. Windsor challenged the remaining defenses in its motion. D.E. 25. The Pyrons did not respond to Windsor's arguments challenging the remaining defenses but rather stated, “Defendant [sic] has asserted numerous other defenses which it will not pursue.” D.E. 29, p. 2. For that reason, the Court GRANTS IN PART Windsor's motion (D.E. 25) and DISMISSES the Pyrons's defenses based upon: failure to mitigate damages; illegality; unconscionability; unclean hands; and violation of the Texas Constitution.

         C. The Limitations Defense

         The parties do not dispute that a four-year statute of limitations applies to an action seeking to collect a debt by foreclosure of a lien on real property. Tex. Civ. Prac. & Rem. Code § 16.035(b). Neither is there any disagreement that the cause of action accrues when the holder of the note accelerates the debt. See e.g., Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001).

         The Pyrons rely on the fact that Windsor's predecessor in interest accelerated the indebtedness on the note by letter dated December 1, 2011. Given that this action was not filed until May 18, 2017 (more than five years after the debt was accelerated), it is barred by limitations absent some other intervening factor. Windsor asserts that an intervening factor was its predecessor's abandonment or rescission of the December 1, 2011 acceleration before the expiration of four years from that date. Thus, Windsor claims that limitations did not begin to run until the second acceleration of indebtedness on December 13, 2016. In that event, the 2017 filing would be well within the four-year period.

         The mortgage was not assigned to Windsor until September 26, 2016. D.E. 25-1, pp. 36-38. Thus, the Court must determine whether the undisputed facts set out above demonstrate that Windsor's predecessors in interest took the necessary action to abandon the December 1, 2011 acceleration within four years of that date. Windsor argues that it did so by (a) nonsuiting the prior foreclosure action and (b) sending monthly statements seeking to collect only the overdue amounts of monthly payments and associated charges, which were less than the full amount of principal and interest that would have been due and owing if the note were still accelerated. The Pyrons argue that the nonsuit was nothing more than a failure to seek a remedy, the monthly statements were insufficient to abandon the acceleration, and they never actually received any monthly statements of any kind after the 2011 acceleration and before the expiration of limitations.

         1. Abandonment of ...

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