Martin v. New Century Mortg. Co.

• Decision Date: 14 June 2012
• Docket Number: No. 01–11–00792–CV.,01–11–00792–CV.
• Citation: 377 S.W.3d 79
• Parties: Marvin MARTIN and Natalie Arceneaux, Appellant, v. NEW CENTURY MORTGAGE COMPANY, Carrington Mortgage Services, LLC, and Barclays Capital Real Estate, Inc. d/b/a Home Q Servicing, Appellee.
• Court: Texas Court of Appeals

377 S.W.3d 79

Marvin MARTIN and Natalie Arceneaux, Appellant,

v.NEW CENTURY MORTGAGE COMPANY, Carrington Mortgage Services, LLC, and Barclays Capital Real Estate, Inc. d/b/a Home Q Servicing, Appellee.

No. 01–11–00792–CV.

Court of Appeals of Texas,

Houston (1st Dist.).

June 14, 2012.

Kevin M. Camp, Houston, TX, for Appellant.

Peter C. Smart, Crain, Caton & James, P.C., Houston, TX, for Appellee.

Panel consists of Justices KEYES, BLAND, and SHARP.

OPINION

JANE BLAND, Justice.

This contractual standing case arises out of an attempted non-judicial foreclosure of a mortgage loan. Homeowners Marvin Martin and Natalie Arceneaux appeal the trial court's summary judgment order in favor of New Century Mortgage Corporation, Carrington Mortgage Services, and Barclays Capital Real Estate, Inc. d/b/a Home Q Servicing. Wells Fargo Bank N.A., acting as trustee for Carrington Mortgage Loan Trust, Series 2006–NC4 Asset–Backed Pass Through Certificates (“Wells Fargo”), responded to the suit (collectively, “the lenders”). New Century assigned the deed of trust and underlying debt to Wells Fargo in its capacity as trustee. Carrington Mortgage acts as servicer on behalf of Wells Fargo.

On appeal, the homeowners maintain that the trial court erred in granting summary judgment because (1) no evidence demonstrates that Carrington and Wells Fargo own the underlying debt and fact issues exist as to various claims against them for deceptive acts or practices; and (2) the underlying promissory note was pooled into a trust in violation of the trust's pooling agreement and thus any assignment of the note was invalid. We conclude that Wells Fargo had standing to enforce the note and its rights via contractual assignment of the note. We further conclude that the homeowners have failed to raise a fact issue on their federal and state claims against the lenders. We therefore affirm.

Background

In July 2006, Martin and Arceneaux purchased a house in Missouri City, Texas. They financed the purchase by executing a thirty-year, adjustable rate promissory note in the amount of $218,768.00, with interest payable to the order of New Century Mortgage Corporation. A deed of trust, dated the same day, created a lien on their homestead to secure payment of the note. The deed of trust provides that “the note (together with this security instrument) can be sold one or more times without prior notice to the borrower.”

Carrington Mortgage Services, LLC (“Carrington”) serviced the loan as agent for New Century and acted as its limited power of attorney. In 2009, New Century assigned the deed of trust, and all debts it secured, to Wells Fargo. Carrington continued servicing the loan.

In November 2008, before the loan's assignment to Wells Fargo, Carrington notified the homeowners that they had defaulted on the note, because they had failed to make their monthly mortgage payments and had allowed the IRS to impose tax liens on the property. When the homeowners failed to cure their default, Carrington accelerated the maturity date on the loan and demanded payment of the entire debt due. The homeowners did not pay the outstanding debt, and Wells Fargo scheduled a foreclosure sale to take place April 6, 2010.

The homeowners filed this lawsuit on April 5, 2010—the day before the foreclosure sale. Their pro se petition alleged statutory fraud, Tex. Bus. & Com.Code Ann. § 27.01(a) (West 2009), and violations of the Real Estate Settlement Procedures Act, 12 U.S.C. § 2605 (2006), the Texas Deceptive Trade Practices Act, Tex. Bus. & Com.Code Ann. § 17.46 (West 2011), and the Truth in Lending Act, 15 U.S.C. § 1601–1667(f) (2006). The homeowners also sought to enjoin the foreclosure on the basis that “Carrington ... [had] not validated the debt or proved standing.”

Carrington answered the suit; Wells Fargo answered as assignee of the mortgage and deed of trust. Wells Fargo and Carrington generally denied the homeowners' claims and asserted the statute of limitations as an affirmative defense to the homeowners' federal causes of action.

Wells Fargo and Carrington subsequently moved for summary judgment on both traditional and no-evidence grounds. Their traditional summary judgment motion raised limitations as a bar to each of the homeowners' claims, including their DTPA and statutory fraud claims. They attached to the motion copies of these relevant documents:

• The thirty-year, adjustable rate promissory note;

• The deed of trust granting New Century Mortgage Corporation a lien on the house;

• A July 2006 Federal Truth in Lending disclosure statement;

• A 2008 loan modification agreement between Carrington Mortgage Services and the homeowners;

• An assignment of the deed of trust from New Century Mortgage Corporation to Wells Fargo Bank, N.A., as trustee for Carrington Mortgage Loan Trust, Series 2006–NC4 Asset–Backed Pass Through Certificates;

• Carrington's records of the homeowners' payments;

• Copies of federal tax liens on the property; and

• An affidavit of Carrington's custodian of records, authenticating the documents and averring that Carrington had, at all relevant times, serviced the loan.

The homeowners responded, contesting the chain of assignment from New Century to Wells Fargo.¹ The homeowners attached a letter from New Century directing their future correspondence to Wells Fargo as the assigned holder of the note.

The trial court granted summary judgment. The homeowners then moved for a new trial, arguing that new evidence revealed that their promissory note had been improperly pooled into the Carrington Mortgage Loan Trust, Series 2006–NC 4 Asset–Backed Pass Through Certificates. Their motion claimed that, because the note was pooled in violation of the terms of the trust's agreement, Wells Fargo had no standing to enforce the promissory note. The trial court overruled the motion by operation of law. SeeTex.R. Civ. P. 329b(c).

Discussion

The homeowners contend that the trial court erred in granting summary judgment in favor of Wells Fargo and Carrington, because Wells Fargo lacks standing to foreclose, no evidence demonstrates that it owns the homeowners' promissory note, and the note was improperly pooled into Carrington Mortgage Loan Trust. They further contend that fact issues exist with respect to their cause of action for fraud and deceptive lending practices.

I. Standard of Review

We review de novo the trial court's ruling on a motion for summary judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009). Under the traditional standard for summary judgment, the movant has the burden to show that no genuine issue of material fact exists and that the trial court should grant a judgment as a matter of law. Tex.R. Civ. P. 166a(c); KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). When reviewing a summary judgment, we take as true all evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts in the nonmovant's favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005); Provident Life & Accid. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003).

Traditional summary judgment is proper only if the movant establishes that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c). The motion must state the specific grounds relied upon for summary judgment. Id. A defendant moving for traditional summary judgment must conclusively negate at least one essential element of each of the plaintiff's causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997).

After adequate time for discovery, a party may move for a no-evidence summary judgment on the ground that no evidence exists to support one or more essential elements of a claim or defense on which the opposing party has the burden of proof. Tex.R. Civ. P. 166a(i). The trial court must grant the motion unless the nonmovant produces summary judgment evidence raising a genuine issue of material fact. Id.; Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex.2006). More than a scintilla of evidence exists if the evidence “would allow reasonable and fair-minded people to differ in their conclusions.” Forbes Inc. v. Granada Bioscis., Inc., 124 S.W.3d 167, 172 (Tex.2003). When, as here, a party moves for summary judgment on both traditional and no-evidence grounds, we first review the trial court's decision under the no-evidence standard. SeeTex.R. Civ. P. 166a(i); Mem'l Hermann Hosp. Sys. v. Progressive Cnty. Mut. Ins. Co., 355 S.W.3d 123, 126 (Tex.App.-Houston [1st Dist.] 2011, pet. denied).

II. Standing as Owner or Holder of the Debt

The homeowners' pleading for injunctive relief contested the lenders' standing to foreclose. In their summary judgment response, they similarly contend that neither Wells Fargo nor Carrington could collect on the promissory note or foreclose, because neither had demonstrated its status as holder or owner of the note. Although the homeowners' pleadings do not assert specific claims for wrongful foreclosure or enforcement of the promissory note, they sought injunctive relief against any effort to enforce it, because the lenders “have not as yet validated the debt or proved standing.” We conclude that both parties addressed the question of whether Wells Fargo possessed standing to collect on the note and tried the issue by consent.²

To recover on a debt due under a promissory note, a lender must establish that the note in question exists, the debtor executed the note, the lender is the holder or owner of the note, and a certain balance is due and owing on the note. Wells Fargo Bank, N.A. v. Ballestas, 355 S.W.3d 187, 191 (Tex.App.-Houston [1st Dist.] 2011, no pet.) (quoting Cadle Co. v. Regency Homes, Inc., 21 S.W.3d 670, 674 (Tex.App.-Austin 2000, pet. denied)); Austin v. Countrywide Homes...