HSBC Bank USA, N.A. v. Crum
| Decision Date | 17 October 2018 |
| Docket Number | No. 17-11206,17-11206 |
| Citation | 907 F.3d 199 |
| Parties | HSBC BANK USA, N.A., AS TRUSTEE FOR MERRILL LYNCH MORTGAGE LOAN Asset-Backed Certificates Series 2005-WMCI, Plaintiff-Appellee v. Kenneth E. CRUM, Defendant-Appellant |
| Court | U.S. Court of Appeals — Fifth Circuit |
Mark Douglas Cronenwett, Mackie Wolf Zientz & Mann, P.C., Dallas, TX, for Plaintiff-Appellee.
David Blake Urteago, Urteago, P.C., Julie Pettit, Dallas, TX, for Defendant-Appellant.
Before STEWART, Chief Judge, and WIENER and HIGGINSON, Circuit Judges.
Defendant-Appellant Kenneth E. Crum ("Defendant" or "Crum") executed a home equity note creating a lien on his home. When Crum defaulted on the note, Plaintiff-Appellee HSBC Bank, USA, N.A. ("Plaintiff" or "HSBC") sent Crum a notice of default and notice of acceleration, indicating that the loan would mature on June 10, 2009. During the next few years, Crum filed for Chapter 7 bankruptcy and filed an independent lawsuit seeking to prevent foreclosure. After these issues were resolved, HSBC filed this lawsuit in 2014, seeking to foreclose on the property. HSBC then filed a motion for summary judgment which the district court granted. Crum now appeals that decision. We affirm.
In 2004, Crum executed a home equity note (the "Note") and signed a Home Equity Security Instrument (the "Security Instrument") that created a lien on his real property. HSBC, as Trustee for Merrill Lynch Mortgage Loan Asset-Backed Certificates Series 2005-WMCI, became the holder of the Note and the Security Interest in 2009. When Crum stopped making timely payments, HSBC’s mortgage servicer, Wilshire Credit Corporation, sent Crum a Notice of Default and Intent to Accelerate in May 2009, followed by a Notice of Acceleration of Loan Maturity on June 10, 2009.1 HSBC had four years, from that date, or until June 10, 2013, to foreclose.2 Meanwhile, on June 3, 2010, Crum had filed for Chapter 7 bankruptcy. The bankruptcy court granted him a discharge on October 7, 2010.
HSBC subsequently filed for foreclosure under Texas Rule of Civil Procedure 736. Crum then filed an independent lawsuit in state court on July 4, 2011, seeking to prevent HSBC’s foreclosure. The defendants in that lawsuit were granted summary judgment on November 14, 2012.
The mortgage servicer at the time, Select Portfolio Services, sent Crum a Notice of Default on October 15, 2013, requesting less than the full amount owed to satisfy the debt, thereby effectively abandoning acceleration.3 Select Portfolio Services subsequently reaccelerated the loan in March 2014. Then, in April 2014, a new servicer, Nationstar Mortgage LLC ("Nationstar"), revoked that acceleration to "provide an opportunity to fully cure the default." On May 21, 2014, however, Nationstar sent a final Notice of Acceleration of Loan Maturity.
HSBC filed the instant foreclosure suit on September 29, 2014, then filed a motion for summary judgment. The district court granted summary judgment to HSBC. Crum now appeals, contending that (1) HSBC was not the holder of the Note and therefore lacked standing to bring this claim; (2) HSBC’s lawsuit was untimely; and (3) the final judgment is invalid because it fails to comply with Texas Rule of Civil Procedure 309.
We review the grant of summary judgment de novo and apply the same standard as the district court.4 Under Federal Rule of Civil Procedure 56, summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."5 If the moving party meets that burden, the non-moving party must show the existence of a genuine issue for trial,6 and the evidence and the inferences must be viewed in the light most favorable to the non-movant.7 Conclusional allegations, unsubstantiated assertions, or a mere "scintilla" of evidence are insufficient to defeat summary judgment.8
The main factual dispute here is who owned the Note and Security Instrument at the time HSBC filed suit. According to HSBC, it has owned and held the Note since 2009. Crum contends, however, that Bank of America assigned the Note and Security Instrument to Nationstar in 2013, indicating that at some point prior to that date, HSBC had assigned the Note and Security Instrument to Bank of America. Crum further alleges that he contacted two HSBC representatives about the Note, and that they could not find a record that he had a mortgage with HSBC. HSBC responds that it did not assign the Note, but instead had delegated the servicing of the Loan Agreement to BAC Home Loans Servicing LP, a subsidiary of Bank of America N.A., on March 1, 2010.
Crum contends that the district court erred in granting summary judgment to HSBC because HSBC had failed to demonstrate that it owned the Note and Security Interest. According to Crum, this means that HSBC did not have standing to bring the claim, so the district court lacked subject matter jurisdiction.
Standing is a component of subject matter jurisdiction.9 "[T]he jurisdictional issue of standing is a legal question for which review is de novo."10 Subject matter jurisdiction may be raised at any time, and may even be raised for the first time on appeal.11 Here, the district court determined that Crum did not present a genuine dispute of material fact as to whether HSBC owned the Note and Security Instrument and thus had standing to bring the claim. The district court held that the uncontroverted evidence demonstrated that HSBC was the owner of the note at the time it filed its foreclosure lawsuit. Crum now challenges that element of the district court’s summary judgment decision.
Even if Crum may rely on the 2013 Assignment, he still has failed to raise a genuine factual dispute as to whether HSBC held or owned the Note at the time it filed the lawsuit. HSBC argues that Crum waived any arguments based on the 2013 Assignment, because he did not raise them in his response to HSBC’s motion for summary judgment, but submitted the 2013 Assignment for the first time in his motion to amend the judgment. HSBC contends that, because Federal Rule of Civil Procedure 59(e) specifies that a motion to amend judgment "cannot be used to raise arguments that could, and should, have been made before the judgment issued," Crum is barred from relying on the 2013 Assignment. HSBC also argues that, as Bank of America’s only interest in the loan was that of a mortgage servicer, that is the only interest that could have been transferred by the 2013 Assignment.
HSBC submitted undisputed evidence that it was the holder and owner of the Note and Security Instrument from and after 2009. Crum’s affidavit detailing his phone calls to HSBC about his mortgage do not establish that HSBC was no longer the holder or owner of the Note. Neither does the 2013 Assignment contradict the fact that HSBC remained the owner and holder of the Note. Bank of America and Nationstar are the only parties to that agreement. HSBC admits that Bank of America was the servicer of the Note, but there is no evidence indicating that Bank of America ever owned or held the Note or Security Instrument. The 2013 Assignment is ambiguous regarding what interest Bank of America was transferring, so that argument does not undermine HSBC’s evidence that it was the holder of the Note.
Furthermore, "Texas courts have explained on multiple occasions that a note and a deed of trust constitute separate actions."12 Because those two types of agreements constitute separate actions, "Texas courts have ‘rejected the argument that a note and its security are inseparable by recognizing that the note and the deed-of-trust lien afford distinct remedies on separate obligations.’ "13 Even if HSBC had not owned or had any interest in the Deed of Trust, this would not demonstrate that it no longer owned or held the Note, which constitutes an entirely separate instrument.14 Because Crum failed to present evidence raising an issue of material fact as to HSBC’s ownership of the note, the district court properly granted summary judgment on this issue.
A suit to foreclose on real property must be brought within four years after the cause of action accrues.15 A cause of action for foreclosure normally accrues on the maturity date of the note.16 When a note or deed of trust secured by real property includes an optional acceleration clause, "the action accrues ... when the holder actually exercises its option to accelerate."17 The parties do not dispute that the Security Instrument includes an optional acceleration clause and that HSBC first accelerated the Note on June 10, 2009. Unless the limitations period was tolled, the statute of limitations would have expired on June 10, 2013. Thus, to reset the limitations period, HSBC would have had to abandon acceleration prior to that date. The parties agree that HSBC abandoned the acceleration of the loan on October 15, 2013—27 days after the limitations period would have expired.
The district court held that HSBC’s suit was timely because the limitations period was tolled by two different lawsuits. First, the court held that the limitations period was tolled for 127 days when Crum filed for bankruptcy in June 2010. Second, it determined that the limitations period was tolled for 500 days under Texas Rule of Civil Procedure 736 when Crum filed an independent lawsuit to prevent foreclosure. Crum concedes that his bankruptcy suit tolled the statute of limitations, but contends that it did so for only 126 days, making HSBC’s foreclosure suit untimely.
a. 11 U.S.C. § 108. Extension of time
11 U.S.C. § 108(c) outlines the effect of a bankruptcy stay on statutes of limitations. It states:
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