Seigel v. U.S. Bank Nat'l Ass'n

• Decision Date: 22 November 2016
• Docket Number: CIVIL ACTION NO. 3:15–CV–102
• Citation: 218 F.Supp.3d 541
• Parties: Darren SEIGEL, et al, Plaintiffs, v. U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Structured Asset Investment Loan Turst, Mortgage Pass–Through Certificates, Series 2005–10, Defendant.
• Court: U.S. District Court — Southern District of Texas

218 F.Supp.3d 541

Darren SEIGEL, et al, Plaintiffs,

v.U.S. BANK NATIONAL ASSOCIATION, as Trustee for the Structured Asset Investment Loan Turst, Mortgage Pass–Through Certificates, Series 2005–10, Defendant.

CIVIL ACTION NO. 3:15–CV–102

United States District Court, S.D. Texas, Galveston Division.

Signed November 22, 2016

Ira D. Joffe, Attorney at Law, Bellaire, TX, Robert Chamless Lane, The Lane Law Firm, Houston, TX, for Plaintiffs.

Robert T. Mowrey, Jason Levi Sanders, Marc Daniel Cabrera, Kathryn Grace Rawlings, Locke Lord LLP, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

George C. Hanks Jr., United States District Judge

Defendant U.S. Bank National Association¹ ("U.S. Bank") moves for summary judgment in this foreclosure action. In 2009, Plaintiffs Darren and Heidi Siegel ("the Siegels") defaulted on their real property lien. According to the Siegels, the Texas four-year statute of limitations on foreclosure began to run when U.S. Bank accelerated the mortgage. They argue that U.S. Bank is now time-barred from foreclosing. U.S. Bank counters that it timely and unilaterally abandoned acceleration, effectively resetting the statute of limitations. At issue is whether U.S. Bank can, and did, unilaterally abandon acceleration. For reasons described below, the Court GRANTS U.S. Bank's motion for summary judgment.

BACKGROUND²

In 2005, the Siegels executed a "Texas Home Equity Adjustable Rate Note" and "Texas Home Equity Security Instrument" (together, the "Loan") for $256,000 in favor of original lender New Century Mortgage Corporation.³ The Siegels provided their Property, located at 13727 Windlass Circle, Galveston, Texas 77554, as security. The Loan contained an optional acceleration clause:

8 (C). Notice of Default

If I am in deficit, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of principal that has not been paid and all the interest I owe on that amount. The date must be at least 30 days after the date on which the notice is mailed to me or delivered by other means....

In 2009, the Siegels stopped paying their monthly mortgage payment. U.S. Bank issued a NOTICE OF DEFAULT AND INTENTION TO ACCELERATE , informing the Siegels of its intent to accelerate the mortgage. On June 9, 2010, U.S. Bank issued a NOTICE OF ACCELERATION . U.S. Bank moved to foreclose on the lien. On September 16, 2011, U.S. Bank applied for and received an order of nonsuit. On September 28, 2011, U.S. Bank issued a NOTICE OF DEFAULT AND INTENTION TO ACCELERATE, providing that:

1. The loan is in default for failure to make the regular monthly payments required by the Note and Deed of Trust.

2. The action required to cure the default is the payment of all sums due under the Note and Deed of Trust.

3. If the default is not cured by such payment within thirty (30) days of the date of this notice, without further notice or demand, the maturity date of the Note will be accelerated and all sums secured by the Deed of Trust will be declared to be immediately due and payable....

....

As of September 18, 2011, the amount required to cure the default is $164,745.54....

A NOTICE OF ACCELERATION followed on November 3, 2011. It stated that U.S. Bank "has accelerated the maturity date of the Note and has declared all sums secured by the Deed of Trust to be immediately due and payable." In March 2015, the Siegels filed suit in the 122nd District Court of Galveston County, Texas. They requested a permanent injunction that would 1) declare that the statute of limitations barred U.S. Bank from foreclosing; 2) specify the parties' respective rights and duties in connection with the Loan; 3) declare that U.S. Bank lacked the power of sale; and 4) declare that the power of sale and property lien are void. U.S. Bank timely removed the case. On October 30, 2015, it issued a RESCISSION OF ACCELERATION . U.S. Bank's motion for summary judgment, the Siegels' Reply, and U.S. Bank's Response followed.

SUMMARY JUDGMENT STANDARD

U.S. Bank's motion for summary judgment is governed by Rule 56 of the Federal Rules of Civil Procedure. Under this rule, a reviewing court "shall grant summary judgment 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." Fed. R. Civ. P. 56(a) ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is "material" if its resolution in favor of one party might affect the outcome of the suit under governing law. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 242–43, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue is "genuine" if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party. Id.

"When seeking summary judgment, the movant bears the initial responsibility of demonstrating the absence of a genuine issue of material fact with respect to those issues on which the movant bears the burden of proof at trial." Serna v. Law Office of Joseph Onwuteaka, P.C., 614 Fed.Appx. 146, 152 (5th Cir. 2015), cert. denied , ––– U.S. ––––, 136 S.Ct. 1160, 194 L.Ed.2d 174 (2016) (citing Transamerica Ins. Co. v. Avenell , 66 F.3d 715, 718 (5th Cir. 1995) (per curiam)). The movant discharges this burden by making out "a prima facie case that would entitle [it] to judgment as a matter of law if uncontroverted at trial." Id. (internal citations omitted).

If the movant succeeds, "the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Id. (citing Little v. Liquid Air Corp. , 37 F.3d 1069, 1075 (5th Cir. 1994) ). In deciding a summary judgment motion, the reviewing court must "construe all facts and inferences in the light most favorable to the nonmoving party." Dillon v. Rogers , 596 F.3d 260, 266 (5th Cir. 2010) (internal citation and quotation marks omitted). However, "[u]nsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence." Adair v. Deutsche Bank Nat'l Trust Co. , No. A–15–CA–395–SS, 2016 WL 2918573, at *2 (W.D. Tex. May 18, 2016) (internal citation and quotation marks omitted).⁴ The nonmovant must "identify specific evidence in the record and to articulate the precise manner in which that evidence supports [its] claim." Id . A court ruling on a motion for summary judgment will disregard disputed fact issues that are "irrelevant and unnecessary" Id .

DISCUSSION

Where a claim is governed by state law, "the law to be applied in any case is the law of the state." Erie Railroad Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The claim springs from Texas's Civil Practice and Remedy Code. It is thus properly governed by Texas law. Boren v. U.S. National Bank Ass'n , 807 F.3d 99, 104 (5th Cir. 2015).

Under Texas law, a party must foreclose "not later than four years after the day the cause of action accrues." TEX. CIV. PRAC. & REMEDIES CODE ANN. § 16.035 (a) (West 1997). When a note is payable in installments, "the four-year limitations period does not begin to run until the maturity date of the last...installment." § 16.035 (e). Once the four-year period expires, "the real property lien and a power of sale to enforce the real property lien become void." § 16.035 (d). The limitations statute for a note containing an optional acceleration clause does not run automatically upon default. Instead, "the action accrues only when the holder actually exercises its option to accelerate." Holy Cross Church of God in Christ v. Wolf , 44 S.W.3d 562, 566 (Tex. 2001). Acceleration requires a "clear and unambiguous... (1) notice of intent to accelerate and (2) notice of acceleration." Id . Acceleration may be abandoned, which "effectively restor[es] the note's original maturity date." Id . at 566–67 (citing Denbina v. City of Hurst , 516 S.W.2d 460, 463 (Tex. Civ. App—Tyler 1974, no writ) ).

In Boren v. U.S. National Association , the United States Court of Appeals for the Fifth Circuit recently decided a case containing a set of facts that is remarkably similar to those of the instant case. 807 F.3d 99 (5th Cir. 2015). In Boren , property owners defaulted on a home equity loan, also executed with U.S. Bank. Id . at 102. The loan contained an optional acceleration clause. Id . U.S. Bank notified them that their loan was in default and would be accelerated if the default was not cured. Id . U.S. Bank next issued a Notice of Acceleration, and applied for a nonjudicial foreclosure order that it later dismissed. Id. U.S. Bank then sent several Notices of Default, each followed by a Notice of Acceleration. Id . These Notices reported the amount—less than the full acceleration balance—that was necessary to cure the default. Id. at 102–03. This pattern continued until the Borens sued, arguing that the bank's foreclosure was time-barred by § 16.035. Id . at 103. The district court granted summary judgment, holding that, "[the bank], through its actions, abandoned its previous acceleration of the debt, and the statute of limitations, therefore, did not bar foreclosure." Id. (internal citations omitted).

On appeal, the bank acknowledged that it triggered the statute of limitations. Id. at 104. This occurred when it provided the Borens with notice of intent to accelerate and notice of acceleration. Id . However, it argued, acceleration was abandoned by sending a subsequent Notice of Default. Id. This notified the Borens that they "could bring their loan current by submitting the amount of their past due monthly payments—rather than the full balance of the loan—and provided that the bank would accelerate the loan if the Borens failed to cure this arrearage within forty-five days." Id. According to the bank, "by sending this Notice, it restored the Note to its original terms and the statute of limitations did not begin to run again until it...