Opinion
NO. 03-19-00042-CV
04-17-2020
Arthur Laguette, Appellant v. U.S. Bank, N.A., as Trustee for The Holders of The Specialty Underwriting and Residential Finance Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-BC4, Appellee
FROM THE 26TH DISTRICT COURT OF WILLIAMSON COUNTY
NO. 15-1161-C26 , THE HONORABLE DONNA GAYLE KING, JUDGE PRESIDING MEMORANDUM OPINION
Appellant Arthur Laguette appeals from the trial court's granting of summary judgment in favor of appellee U.S. Bank, N.A. We will affirm the trial court's final order.
APPLICABLE LAW
"Under state law, a sale of real property under a power of sale in a mortgage or deed of trust that creates a real-property lien must be made not later than four years after the day the cause of action accrues," and "[w]hen this four-year period expires, the real-property lien and the power of sale to enforce the lien become void." Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001) (citing Tex. Civ. Prac. & Rem. Code § 16.035). "If a series of notes or obligations or a note or obligation payable in installments is secured by a real property lien, the four-year limitations period does not begin to run until the maturity date of the last note, obligation, or installment." Tex. Civ. Prac. & Rem. Code § 16.035(e); see Wolf, 44 S.W.3d at 566. When such a note includes an optional acceleration clause, the statute of limitations begins to run when the noteholder exercises its option to accelerate. Wolf, 44 S.W.3d at 566.
However, a noteholder that accelerates a note due to default can "abandon acceleration if the holder continues to accept payments without exacting any remedies available to it upon declared maturity." Id. at 566-67. A noteholder's abandonment of acceleration "has the effect of restoring the contract to its original condition, including restoring the note's original maturity date." Khan v. GBAK Props., Inc., 371 S.W.3d 347, 353 (Tex. App.—Houston [1st Dist.] 2012, no pet.); see Wolf, 44 S.W.3d at 566-67; Brannick v. Aurora Loan Servs., LLC, No. 03-17-00308-CV, 2018 WL 5729104, at *2 (Tex. App.—Austin Nov. 2, 2018, pet. denied) (mem. op.) ("The effect of the abandonment is to restore the note's original maturity date which, in turn, resets the statute of limitations."). In Graham v. LNV Corp., however, this Court referred to a possible exception to a lender's unilateral right to abandon acceleration:
Texas appellate courts have held that the holder of a note who has exercised its option to accelerate may unilaterally abandon acceleration of the note so long as the borrower neither detrimentally relied on the acceleration nor objected to the abandonment of the acceleration.No. 03-16-00235-CV, 2016 WL 6407306, at *3 (Tex. App.—Austin Oct. 26, 2016, pet. denied) (mem. op.). It is that exception on which Laguette attempts to rely.
FACTUAL AND PROCEDURAL SUMMARY
In 2006, Laguette took out a loan to buy homestead property, executing a promissory note payable to U.S. Bank's predecessor. He ceased making payments by April 2008, and in June 2008, U.S. Bank filed an Application for Order for Foreclosure (Pursuant to Tex. R. Civ. P. 736)." See Tex. R. Civ. P. 736.1-.13 (procedures for obtaining expedited order allowing lien foreclosure). That application recites that the lender had provided Laguette with "the requisite notice of default/notice of intent to accelerate and notice of acceleration" in May and June 2008. In March 2009, the trial court signed an "Agreed Order for Foreclosure Concerning" the property, reciting that Rule 736's requirements for a foreclosure order had been met and that U.S. Bank was allowed to proceed with foreclosure ("the Agreed Order"). See id. The Agreed Order, which was signed by Laguette, acting pro se, provided that U.S. Bank would not foreclose before April 7, 2009. The bank did not foreclose after that date, however, instead filing another application under Rule 736 in early 2010. On June 21, 2010, the trial court signed a second order allowing the bank to foreclose on the property.
The record indicates that Laguette defaulted no later than April 2008 and may have defaulted as early as December 2007. Although the 2008 application was filed by U.S. Bank, which recited that it was the owner of the promissory note, the record reflects that the assignment of the loan to U.S. Bank was signed in December 2009.
Copies of those acceleration notices do not appear in the appellate record.
Rather than proceed with foreclosure, U.S. Bank sent Laguette a letter on April 27, 2011, stating that the loan was "in serious default" due to nonpayment and that Laguette had "the right to cure the default." Laguette was informed that he could cure the default by paying the overdue amount, along with costs and fees, by May 27, 2011. He was informed that if he did not cure his default by that date, "the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time." Laguette did not cure, and U.S. Bank sent a notice of acceleration in January 2012.
In November 2012, U.S. Bank filed another application for an order pursuant to Rule 736. The trial court granted the application, signing a foreclosure order on March 11, 2013. Laguette filed suit on May 7, 2013, to block the foreclosure, alleging wrongful foreclosure and violations of the Texas Debt Collection Practices Act. After the trial court stayed the foreclosure, the lawsuit was removed to federal court. The federal district court granted summary judgment in favor of U.S. Bank in April 2014, the Fifth Circuit affirmed, and the Supreme Court denied Laguette's petition for a writ of certiorari on June 29, 2015. See Laguette v. U.S. Bank, N.A., No. A-13-CV-495 LY, 2014 WL 11498178 (W.D. Tex. Feb. 28, 2014), report and recommendation adopted, 2014 WL 11510273 (W.D. Tex. Apr. 2, 2014), aff'd, 602 F. App'x 936 (5th Cir. 2015), cert. denied, 135 S.Ct. 2903 (2015).
After resolution of Laguette's lawsuit, U.S. Bank mailed him a notice of sale in November 2015, setting a foreclosure sale for December 1, 2015. In response, Laguette filed the underlying proceeding, seeking to enjoin the foreclosure sale and asking for a declaratory judgment that the lien is void. Laguette argues that U.S. Bank was barred by limitations from seeking foreclosure, insisting that the deadline to foreclose or sue ran four years after U.S. Bank's first order allowing for foreclosure pursuant to Rule 736. See Tex. Civ. Prac. & Rem. Code § 16.035 (party must sue for foreclosure under real property lien within four years of date cause of action accrues).
U.S. Bank answered and filed a counterclaim seeking declarations that would allow it to proceed with foreclosure, then moved for summary judgment on Laguette's claim and on its own counterclaim. U.S. Bank argues that the running of limitations in such a case is triggered not by the date of a foreclosure order but by the date the loan is accelerated; that it abandoned its earlier acceleration notices in 2011 when it sent the new notice of default, allowing Laguette the opportunity to cure his default; and that limitations did not start to run until January 31, 2012, when it sent the second notice of acceleration.
In response, Laguette argues that U.S. Bank could not unilaterally abandon its original acceleration of the debt because in entering into the Agreed Order signed in March 2009, Laguette "relied to his detriment upon [U.S. Bank's] evidence." He asserts that he "would not have otherwise entered into the Agreed Order of Foreclosure but for this evidence and the representations made" by opposing counsel. As evidence, Laguette provided his own affidavit, which states that he represented himself in the proceeding that resulted in the March 2009 Agreed Order. He said he signed the Agreed Order "based on the strength of [U.S. Bank's] claims and evidence asserted in that action, which included its notice of acceleration, and the representations made to me by opposing counsel that I could not prevail."
DISCUSSION
The standards we apply in reviewing a trial court's granting of summary judgment are well established: we review the trial court's ruling de novo, Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572, 579 (Tex. 2017); view the evidence in the light most favorable to the non-moving party, indulging every reasonable inference and resolving all doubts in his favor, Lightning Oil Co. v. Anadarko E & P Onshore, LLC, 520 S.W.3d 39, 45 (Tex. 2017); and ask whether the moving party carried its burden to demonstrate that no genuine issue of material fact exists and, therefore, that it is entitled to judgment as a matter of law, Tex. R. Civ. P. 166a(c); Lightning Oil, 520 S.W.3d at 45; KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 79 (Tex. 2015).
This case presents a limited question—whether limitations had run on U.S. Bank's ability to foreclose on the property before it filed the underlying proceeding. To affirm the trial court's granting of summary judgment in favor of the bank, there must be conclusive evidence that limitations had not run. See Graham, 2016 WL 6407306, at *2. Laguette insists that he raised a material issue of fact as to the answer to that question.
"In the absence of a notice of rescission of acceleration, the note holder may waive or abandon acceleration, without agreement from the debtor, by other action." Id. at *3 (cleaned up). "There is no single form an abandonment may take," and a lender may show abandonment of acceleration by conduct. Pitts v. Bank of N.Y. Mellon Tr. Co., 583 S.W.3d 258, 262 (Tex. App.—Dallas 2018, no pet.). A noteholder "can abandon acceleration by continuing to accept payment without exercising any of the remedies available to it upon default, by agreement, or by other actions." Brannick, 2018 WL 5729104, at *2.
U.S. Bank's April 2011 letter stated that the loan was in default; that Laguette owed about $264,000 in missed payments; that he had "the right to cure"; that he could cure by paying $268,373.37 (the missed payments plus late charges and costs) by May 27, 2011; and that if the default was not cured by that date, "the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time." The letter also informed Laguette of "various options that may be available to you . . . to prevent a foreclosure sale of your property," such as a repayment plan or loan modification. The letter thus demonstrates that U.S. Bank was willing to accept payment of less than the full balance of the loan. See id. at *3. The letter also stated that the loan would be accelerated in the future if Laguette did not cure the default, which is inconsistent with the earlier notices of acceleration and clearly indicates the bank's abandonment of acceleration because if the bank intended to rely on the earlier notices, it would not have stated that acceleration could occur in the future. See Pitts, 583 S.W.3d at 265. We hold that U.S. Bank's April 27, 2011 letter established its abandonment of the earlier acceleration of the loan. See Brannick, 2018 WL 5729104, at *3; Bracken v. Wells Fargo Bank, N.A., No. 05-16-01334-CV, 2018 WL 1026268, at *5 (Tex. App.—Dallas Feb. 23, 2018, no pet.) (mem. op.).
Laguette asserts that he raised a fact issue as to the detrimental reliance exception to the lender's right to abandon acceleration. However, although in Graham we made reference to that exception, we also noted "the unresolved question of the validity of unilateral rescission in the face of a debtor's objection or detrimental reliance on the acceleration" and explicitly stated that we were not deciding that question because there was no evidence that the debtor had objected to the rescindment or detrimentally relied on the acceleration. 2016 WL 6407306, at *4 & n.3. Similarly, we need not decide here whether a debtor can assert detrimental reliance to defeat a lender's abandonment of an earlier acceleration because Laguette has not shown that he in fact changed his position in reliance on the acceleration.
The Fifth Circuit has considered the issue at length, observing that "[n]o Texas court has ever held detrimental reliance is an exception" to a lender's right to unilaterally withdraw its exercise of an option to accelerate. Jatera Corp. v. US Bank Nat'l Ass'n, 917 F.3d 831, 835 (5th Cir. 2019); see Callan v. Deutsche Bank Tr. Co., 93 F. Supp. 3d 725, 732-36 (S.D. Tex. 2015) (explaining that law is unclear as to whether detrimental reliance can be asserted as exception to noteholder's right to abandon acceleration). After examining Texas courts' treatment of the issue, the Jatera court concluded that "detrimental reliance is not an exception to the lender's right to unilaterally withdraw an acceleration notice under Texas law." 917 F.3d at 837. The Jatera court reached that conclusion after looking at the cases in which detrimental reliance was asserted as an exception, along with the cases that first referred to the purported exception. Id. at 835-36. It also considered the legislature's 2015 enactment of section 16.038 of the civil practice and remedies code, id. at 837, which provides that if a note payable in installments is accelerated but the accelerated date is rescinded or waived by a "written notice of a rescission or waiver" before limitations expire, the acceleration is "deemed rescinded and waived and the note, obligation, or series of notes or obligations shall be governed by Section 16.035 as if no acceleration had occurred." Tex. Civ. Prac. & Rem. Code § 16.038. As observed by the Jatera court, section 16.038 "provides no exceptions to a lender's right to unilaterally withdraw the acceleration." 917 F.3d at 836; see Tex. Civ. Prac. & Rem. Code § 16.038(e) (specifying that section "does not create an exclusive method for waiver and rescission of acceleration"); see also Act of May 26, 2015, 84th Leg., R.S., ch. 759, § 3, 2015 Tex. Gen. Laws 2309, 2310 (enacting section 16.038 and providing that new law "applies with respect to a maturity date accelerated before, on, or after the effective date of this Act and any notice of a rescission or waiver of an accelerated maturity date served before, on, or after the effective date of this Act").
"To show detrimental reliance, a party must show that he materially changed his position in reliance on another party's promise or representation." Nationstar Mortg., LLC v. Landers, No. 12-17-00047-CV, 2018 WL 1737013, at *6 (Tex. App.—Tyler Apr. 11, 2018, no pet.) (mem. op.). Laguette states that "it is difficult to imagine what could be a more compelling example of detrimental reliance than the entry of a consent judgment authorizing foreclosure of Appellee's lien against Appellant's home from which Appellant could not appeal." However, Laguette's pleadings and affidavit state that he entered into the Agreed Order because of the strength of the bank's evidence in favor of foreclosure and because the bank's attorney said that Laguette would lose the case. That may be so. But those facts do not establish that Laguette changed his position based on the acceleration notices, such as by taking out a new loan, finding other alternative financing sources, selling the property to pay off the loan, or the like. See Callan v. Deutsche Bank Tr. Co., 93 F. Supp. 3d 725, 732 (S.D. Tex. 2015) (noting other cases that rejected claims of detrimental reliance where debtors did not establish change in position, such as obtaining alternative financing or selling property); Landers, 2018 WL 1737013, at *6 ("[T]he Landerses' argument that they borrowed new money to refinance a second-lien purchase-money loan after the conclusion of all appeals, which they had no reason to do if Nationstar could foreclose on its priority lien, indicates that they chose to pay the second loan based on this Court's decision that limitations had run on Nationstar's judicial foreclosure claim rather than on the 2009 notice of acceleration.").
See also Bitterroot Holdings, LLC v. MTGLQ Inv'rs, L.P., No. 5:14-CV-862-DAE, 2015 WL 6442622, at *8 (W.D. Tex. Oct. 23, 2015) ("Harvey's decision not to pay off his debt to the homeowner's association, which he made because '[i]t did not make sense for me to pay off the HOA amount if I couldn't bring my home loan current,' does not represent a change in Harvey's position—he was in debt to his homeowner's association prior to Citimortgage's acceleration of his mortgage debt, and he remained in debt to his homeowner's association after the acceleration. His statement that 'I didn't know about home loan modifications [sic] programs at the time, but I would have tried to get some assistance when I did learn about them' similarly does not qualify as a material change in his position."), aff'd sub nom. Bitterroot Holdings, L.L.C. v. MTGLQ Inv'rs, L.P., 648 F. App'x 414 (5th Cir. 2016).
Laguette insists that he
did obligate himself to a sale of the property. When he executed the consent judgment in February 2009, Appellant obligated himself to the sale of his home by Appellee and enjoined himself from being able to challenge said sale through the filing of an independent lawsuit, which would have otherwise vacated a Rule 736 foreclosure order.However, as Laguette's affidavit acknowledges, he had defaulted on the loan, and U.S. Bank thus had the right to seek foreclosure. By entering into the Agreed Order, Laguette conceded those facts, but such a concession does not amount to a change in position to Laguette's detriment. Laguette has not explained how he could have contested the foreclosure proceeding through an "independent lawsuit" or how he was persuaded to sign the Agreed Order by U.S. Bank's acceleration notices or by anything other than his knowledge that the facts supported the bank's claim for foreclosure. Assuming without deciding that detrimental reliance could be asserted as an exception to the bank's unilateral abandonment of its earlier acceleration, Laguette did not bring forth evidence to show that he changed his position to his detriment in reliance on the acceleration (or indeed that he took any action other than acknowledging that the bank could establish its right to foreclose). Laguette has not shown that his decision to sign the Agreed Judgment and to not contest U.S. Bank's right to foreclose should be viewed as his having changed position to his detriment as a result of the bank's acceleration notice.
We hold that U.S. Bank established as a matter of law that it abandoned its acceleration of the loan. We further hold that Laguette did not raise a genuine issue of material fact as to whether he changed his position to his detriment in reliance on the notices of acceleration and that he therefore did not defeat the bank's evidence showing its right to summary judgment. We overrule Laguette's issues on appeal.
CONCLUSION
We have overruled Laguette's appellate issues. We therefore affirm the trial court's orders granting summary judgment in favor of U.S. Bank.
/s/_________
Jeff Rose, Chief Justice Before Chief Justice Rose, Justices Triana and Smith Affirmed Filed: April 17, 2020