Opinion
04-20-00309-CV
10-26-2022
PLANET HOME LENDING, LLC, Appellant v. Ronnie NUNN, Individually and as Trustee for the 9707 Discovery Land Trust, Appellee
From the 150th Judicial District Court, Bexar County, Texas Trial Court No. 2017-CI-22807 Honorable Martha Tanner, Judge Presiding
Senior judge sitting by assignment.
Sitting: Luz Elena D. Chapa, Justice Beth Watkins, Justice Liza A. Rodriguez, Justice
MEMORANDUM OPINION
Liza A. Rodriguez, Justice
Planet Home Lending, LLC appeals the trial court's judgment in favor of Ronnie Nunn, Individually and as Trustee for the 9707 Discovery Land Trust, declaring that Planet Home's real property lien is void and foreclosure on the residential property is barred by limitations. We affirm the trial court's judgment.
Background
On July 12, 2010, Deanna and Dewey Head (collectively "Head") executed a promissory note for $241,276 (the "Note") secured by a Deed of Trust on residential property located at 9707 Discovery Drive, Converse, Texas (the "Property"). The Note and Deed of Trust were subsequently assigned to Planet Home. Head defaulted in 2012, and Planet Home filed multiple notices of foreclosure sale but never foreclosed on the Property. On March 1, 2013, Planet Home and Head entered into a Loan Modification Agreement which "amend[ed] and supplement[ed]" the terms of the Note and Deed of Trust by extending the maturity date to March 1, 2043 and re-amortizing a "New Unpaid Principal Balance" of $247,289, which included unpaid interest, costs, and expenses, over 360 months. Monthly payments were to resume on April 1, 2013. The Loan Modification Agreement provided that, "[e]xcept as expressly provided in this Agreement, the Note and Security Interest will remain unchanged." Head again defaulted and Planet Home filed multiple notices of foreclosure sale after March 2013 but never foreclosed on the Property.
Formerly known as Green Planet Servicing, LLC.
In late 2017, Nunn contacted Head and expressed an interest in purchasing the Property based on his belief that the limitations period for foreclosure had expired. Nunn signed a warranty deed for the Property on December 4, 2017. At the same time, Nunn learned that Planet Home was attempting to foreclose on the Property. On December 5, 2017, Nunn filed suit against Planet Home seeking a declaratory judgment that Planet Home had accelerated the note more than four years prior but failed to foreclose, and therefore its lien was void. Nunn obtained a temporary restraining order and a subsequent temporary injunction. Planet Home executed a "Notice of Rescission of Acceleration" on December 8, 2017 which was recorded in the deed records on December 11, 2017. The Notice of Recission stated in relevant part that it, "hereby rescinds all prior Accelerations of the debt and maturity of the Note, including but not limited to the Acceleration dates December 13, 2013 . . . [through] November 13, 2017." As the litigation progressed, Nunn amended his petition to add a claim to quiet title to the Property and a claim for trespass to try title, as well as a request for a permanent injunction against any attempted foreclosure.
Head, as seller, executed the warranty deed on January 17, 2018.
The Notice of Recission lists twenty-four "Acceleration" dates from December 13, 2013 through November 13, 2017.
A bench trial took place in December 2019. At trial, the parties disputed the relevant date of acceleration of the Note, which triggered the running of the four-year limitations period for foreclosure. Nunn's live petition alleged that Planet Home accelerated the Note "prior to November 2013" and the limitations period expired no later than November 2017, before he purchased the Property. At trial, Nunn asserted he was twice informed by a Planet Home representative that the Property "had been in foreclosure status since September 4, 2013;" therefore, the four-year limitations period expired no later than September 4, 2017. Planet Home asserted that limitations did not begin to run until December 13, 2013, the first acceleration date listed in its Notice of Rescission. Planet Home argued the recording of its Notice of Rescission on December 11, 2017 abandoned all prior accelerations before limitations for foreclosure expired on December 13, 2017, which was before Head signed the warranty deed to Nunn.
The evidence presented to the trial court consisted of Nunn's testimony, an audio recording, and documentary evidence. Nunn testified he has invested in real property since 2004 and purchases residential properties that have been noticed for foreclosure. Nunn reviewed the Bexar County deed records for the Property before he began negotiating to purchase it from Head in 2017. Specifically, he reviewed the 2010 Deed of Trust and several notices of foreclosure sale filed by Planet Home beginning in 2012. Nunn testified that a note must be accelerated before the property may be noticed for a foreclosure sale, but the notice of acceleration is sent to the borrower and is not filed in the deed records; only the notice of foreclosure sale is recorded. Nunn stated he did not have copies of the acceleration letters sent to Head but the recorded notices of foreclosure sale support an inference that Planet Home sent prior notices of acceleration to Head.
Nunn testified that, before he purchased the Property in 2017, he contacted Planet Home and spoke to a Planet Home representative who told him the acceleration date of the note on the Property was September 4, 2013. Nunn testified he called Planet Home again in 2019 a few months before trial and a Planet Home representative again told him the acceleration date for the Property was "September 2013." Nunn stated he recorded the conversations. The pertinent part of one of the recordings was played at trial, with no objection. On the recording, the Planet Home representative told Nunn, "It's been in a foreclosure status since 2013 September, yes, September 4." Nunn asked, "September 4, 2013?" and the Planet Home representative replied, "Yes, sir." Nunn testified that because the acceleration letter is the first step in any foreclosure, he understood the Planet Home representative's statement to mean the acceleration date was September 4, 2013. Nunn asked who he was speaking with on the recording and the person identified himself as "Manuel" with "Planet Home Lending." Nunn testified he also had additional conversations with people who identified themselves as Planet Home Lending employees and they told him the same thing.
During Nunn's testimony, the following documents were admitted: (1) the Warranty Deed conveying the Property from Head to Nunn; (2) the original Deed of Trust on the Property executed by Head and held by Planet Home; (3) and copies from the Bexar County deed records of several "Notice[s] of Substitute Trustee's Sale of the Property" recorded by Planet Home on December 10,2012, February 11, 2013, December 17, 2013, February 11, 2014, June 9, 2014, and August 11,2014.
Planet Home did not present any witness testimony but introduced the following exhibits at the end of trial: (1) the original Deed of Trust; (2) the recorded Loan Modification Agreement between Planet Home and Head dated March 1, 2013; and (3) Planet Home's Notice of Rescission of Acceleration recorded on December 11, 2017.
This appeal was abated because the original exhibits admitted at trial were lost or misplaced due to issues related to the Covid-19 pandemic. The parties agreed to replace the missing exhibits with copies of the original documents and the trial court determined the replacement exhibits are accurate duplicates of the original exhibits admitted at trial. A supplemental clerk's record was filed in this court containing the replacement exhibits. See Tex. R. App. P. 34.6(f)(4).
At the conclusion of the evidence, the trial court took the matter under advisement. On March 12, 2020, the trial court signed a final judgment in favor of Nunn on all his claims, finding that, as alleged in Nunn's third amended petition, "the Defendant [Planet Home] accelerated the Note prior to November 2013; the Defendant failed to abandon or rescind the acceleration within four years; and the Defendant's lien is therefore void as a matter of law." Planet Home appealed.
Discussion
On appeal, Planet Home asserts the trial court erred in holding that Planet Home's lien on the property was void because the evidence showed Planet Home rescinded its prior accelerations before the limitations period for foreclosure expired.
Applicable Law
"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." Tex. Civ. Prac. & Rem. Code § 16.035(a). Similarly, "[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." Id. § 16.035(b). If a note secured by a real property lien is payable in installments, the limitations period does not begin to run until the maturity date of the last installment. Id. § 16.035(e). However, if a borrower defaults and the note or deed of trust has an optional acceleration clause, the lienholder may accelerate the maturity date of the note and the cause of action to recover the real property or foreclose on the lien accrues on the date of acceleration. Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001) (the cause of action does not automatically accrue upon default, but accrues only when the noteholder actually exercises its option to accelerate). Acceleration requires both a notice of intent to accelerate and a notice of acceleration sent to the borrower. Id. While accrual is a legal question, whether and when a lienholder accelerated a note is a fact question. Id. at 568 (noting the parties may agree or judicially admit the fact of acceleration and the date of acceleration). A lender may exercise an optional acceleration clause without taking steps toward foreclosure or sale of the property. Id. at 569-70 (noting that section 51.002 of Texas Property Code establishes the procedures for conducting a foreclosure sale but "has nothing to do with accrual or limitations" which are governed by section 16.035). The real property lien and power of sale to enforce the lien become void upon expiration of the four-year limitations period. Tex. Civ. Prac. & Rem. Code § 16.035(d); Wolf, 44 S.W.3d at 567.
A lienholder must serve the borrower in default with notice of default and allow the borrower twenty days to cure the default before a notice of foreclosure sale may be given under subsection (b). Tex. Prop. Code § 51.002(d). Subsection (b) requires the lienholder to provide twenty-one days' notice before the date of a foreclosure sale. Id. § 51.002(b).
An acceleration may be abandoned or rescinded by written notice served on the debtor or by the parties' agreement or through other actions. See Tex. Civ. Prac. & Rem. Code § 16.038(b), (c) (procedure for service of written notice of rescission on borrower), (e) (stating that service of written notice is not the exclusive method for rescission of acceleration); see also Wolf, 44 S.W.3d at 566-67 (internal citations omitted); Khan v. GBAK Props., Inc., 371 S.W.3d 347, 353 (Tex. App.-Houston [1st Dist.] 2012, no pet.). Abandonment of acceleration has the effect of restoring the loan contract to its original conditions, including restoring the note's maturity date, and resets the statute of limitations for foreclosure. Tex. Civ. Prac. & Rem. Code § 16.038(a); Wolf, 44 S.W.3d at 567; Khan, 371 S.W.3d at 353.
As noted by the court in Bank of New York Mellon v. Riley, No. 09-18-00403-CV, 2019 WL 5075866, at *4 n.4 (Tex. App.-Beaumont Oct. 10, 2019, pet. denied), the terms "abandonment," "rescission," and "waiver" are used interchangeably in the caselaw with reference to the withdrawal of acceleration of a note's maturity. In drafting section 16.038, the legislature chose to use "rescission" and "waiver." We use the terms "abandonment" and "rescission" in this opinion because those are the terms used by the parties and the trial court.
Analysis
In support of its argument that the trial court erroneously held that Planet Home's lien was void, Planet Home asserts the trial court's written findings of fact and conclusions of law do not support the judgment and are not supported by the evidence in the record.
After the trial court rendered its judgment, Planet Home requested written findings of fact and conclusions of law. The trial court filed the following findings of fact and conclusions of law:
FINDINGS OF FACT:
1. The [Property] … was acquired by Plaintiff RONNIE NUNN. . . who is the legal owner of the Property.
2. The Property was originally encumbered by a Deed of Trust and Lien dated July 12, 2010 held by Amerigroup Mortgage Corporation.
3. The Loan servicing, ownership and authority over said Deed of Trust and Lien was conveyed to . . . Planet Home Lending . . . at some point prior to October of 2012.
4. [Planet Home] recorded, filed, and served a Notice of Foreclosure Sale on October 15, 2012 and again on December 10, 2012.
5. [Planet Home] recorded, filed a [sic] served a Notice of Foreclosure Sale on February 11, 2013.
6. [Nunn] spoke with [Planet Home] in 2017 prior to his acquisition of the Property.
7. [Nunn] was informed and instructed by [Planet Home] that the Deed of Trust, Lien, and Note encumbering the Property had been accelerated prior to September of 2013 and no rescission had occurred.
8. [Nunn] was informed and instructed by [Planet Home] in 2019 in a second conversation that the Deed of Trust, Lien and Note encumbering the Property had been accelerated prior to September of 2013 and no rescission had occurred.
9. [Planet Home] failed to foreclose on the Property within four years from the date the Deed of Trust, Lien, and Note were accelerated.
CONCLUSIONS OF LAW:
1. [Nunn] acquired valid title to the Property.
2. [Planet Home] accelerated the Deed of Trust, Note, and Lien . . . no later than October 15, 2012 and they remained accelerated.
3. [Planet Home] became time barred from foreclosing on the Property when it failed to foreclose on the Property within four years of the date of acceleration.
4. [Planet Home] presented no evidence that the acceleration of the Deed of Trust, Note, and Lien was abandoned or rescinded.
5. The Lien created by the Deed of Trust . . . is void and of no force and effect.
6. The void nature of the Lien is sufficient to warrant permanent injunctive relief.
7. [Nunn] is the owner of the Property free from any lines [sic], encumbrances, or claims made by [Planet Home].
Planet Home contends that it conclusively proved abandonment of all the accelerations through its Loan Modification Agreement and its Notice of Rescission. Planet Home points out that the trial court's findings and conclusions omit any reference to the two documents and their effect on the prior accelerations of the Note. Planet Home argues the judgment's findings of acceleration "prior to November 2013" and no abandonment or rescission within four years are not supported by the trial court's findings and conclusions.
We begin by noting that Planet Home did not present any testimony or documentary evidence that it ever sent Head a notice of intent to accelerate or a notice of acceleration of the maturity date of the Note as required to exercise the optional acceleration clause upon a default. See Wolf, 44 S.W.3d at 566. However, Nunn did not dispute the fact that Planet Home exercised its option to accelerate, only the relevant date of acceleration for limitations purposes. During his testimony, Nunn conceded that Planet Home's intent to accelerate the Note could be reasonably inferred from the notices of foreclosure sale filed in the deed records.
Planet Home argues it proved an abandonment of the accelerations/notices of foreclosure sale in 2012 and early 2013 through the Loan Modification Agreement dated March 1, 2013, which had the effect of abandoning the prior accelerations and resetting the limitations period for foreclosure. We agree. It is well established that a loan modification agreement between the lender and borrower which obviates the default and contains a payment restructure to bring the debt current, especially in the absence of affirmative steps to foreclose, abandons an earlier acceleration and resets the limitations period. See Tex. Civ. Prac. & Rem. Code § 16.038 (acceleration may be abandoned by parties' agreement and abandonment resets statute of limitations for foreclosure); Wolf, 44 S.W.3d at 566-67; see also Bracken v. Wells Fargo Bank, N.A., No. 05-16-01334-CV, 2018 WL 1026268, at *5 (Tex. App.-Dallas Feb. 23, 2018, pet. denied); Biedryck v. U.S. Bank N.A., No. 01-14-00017-CV, 2015 WL 2228447, at *4-5 (Tex. App.-Houston [1st Dist.] May 12, 2015, no pet.). The abandonment evidenced by the Loan Modification Agreement makes Findings of Fact Nos. 4 and 5 irrelevant because the dates of those notices of foreclosure sale precede the March 1, 2013 modification agreement. The trigger date for the statute of limitations therefore is the first date of acceleration after March 1, 2013 that is supported by the record.
Planet Home also asserts the notices of foreclosure sale listed in Findings of Fact Nos. 4 and 5 are not in the record. The replacement exhibits filed in this court contain Notices of Foreclosure Sale recorded by Planet Home on December 10, 2012 and February 11, 2013, but not one recorded on October 15, 2012. A copy of a Notice of Foreclosure Sale recorded on October 15, 2012 is included in the appendix to Nunn's appellee's brief, but we may not consider documents attached to a party's brief that are not contained in the appellate record.
Planet Home next argues that it proved a timely post-modification abandonment through its Notice of Rescission filed on December 11, 2017. As stated above, the Notice of Rescission listed twenty-four acceleration dates from December 13, 2013 through November 13, 2017 that the document was intended to abandon or rescind. Planet Home argues there is "no credible evidence" of an earlier post-modification acceleration than December 13, 2013, the first date listed in its Notice of Recission. However, the trial court was the sole judge of the weight and credibility of the evidence and could have credited Nunn's testimony that Planet Home representatives told him in 2017 and 2019 that the Property had "been in a foreclosure status since 2013 . . . September 4." This testimony, particularly with respect to the 2019 phone call, supports a reasonable inference that "no rescission had occurred" since September 4, 2013, as found by the trial court. As Nunn points out, no representative from Planet Home testified at trial to refute his testimony and the audio recording corroborated his testimony. Therefore, the trial court's Fact Findings Nos. 6-9 are supported by the evidence and are consistent with and support the final judgment's finding of an acceleration "prior to November 2013" which was not abandoned or rescinded. Taking September 4, 2013 as the relevant acceleration date means the four-year limitations period for foreclosure expired on September 4, 2017-well before Planet Home filed its Notice of Rescission on December 11, 2017.
Planet Home also argues that its conduct in repeatedly filing notices of foreclosure sale without taking affirmative steps toward foreclosure prove that it intended to abandon each prior acceleration. Although abandonment may be proven through a lender's course of conduct, the cases finding abandonment through a lender's conduct contain evidence of additional post-acceleration actions by the lender such as negotiating a repayment plan and continuing to accept payments for less than the accelerated balance without pursuing its remedies. See Wolf, 44 S.W.3d at 566-67; Khan, 371 S.W.3d at 353; Bracken, 2018 WL 1026268, at *5; Biedryck, 2015 WL 2228447, at *4-5. Planet Home's subsequent notices of foreclosure sale, by themselves, do not establish abandonment.
Read as a whole, the trial court's findings of fact and conclusions of law support the judgment's findings that Planet Home accelerated the Note prior to November 2013, failed to abandon or rescind the acceleration within four years, and its lien is therefore void as a matter of law.
We disregard Conclusion of Law No. 11 because it is based on a pre-modification date of acceleration, October 15, 2012. However, the remainder of the trial court's findings and conclusions together support the judgment.
Conclusion
Based on the foregoing reasons, we affirm the trial court's judgment.
AFFIRMED