Ther & Co. v. U.S. Bank, N.A.

• Decision Date: 31 October 2019
• Docket Number: CIVIL ACTION H-18-2916
• Parties: THER & COMPANY, LLC, Plaintiff, v. U.S. BANK, N.A. AND OCWEN LOAN SERVICING, LLC, Defendants.
• Court: U.S. District Court — Southern District of Texas

THER & COMPANY, LLC, Plaintiff, v. U.S. BANK, N.A. AND OCWEN LOAN SERVICING, LLC, Defendants.

CIVIL ACTION H-18-2916

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

October 31, 2019

MEMORANDUM OPINION AND ORDER

Pending before the court are plaintiff Ther & Company, LLC's ("Ther & Co.") motion for partial summary judgment (Dkt. 18), defendants U.S. Bank, N.A. ("U.S. Bank") and Ocwen Loan Servicing, LLC's ("Ocwen") response (Dkt. 22), and plaintiff's reply (Dkt. 23). Also pending are defendants' motion for summary judgment (Dkt. 20), plaintiff's response (Dkt. 25), and defendants' reply (Dkt. 28). Having considered the motions, responses, replies, evidentiary record, and applicable law, the court finds that plaintiff's partial motion for summary judgment (Dkt. 18) should be DENIED, and defendants' motion for summary judgment (Dkt. 20) should be GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

This removed action concerns U.S. Bank and Ocwen's attempted foreclosure of 7659 Smiling Wood Lane, Houston, Texas 77086 ("the Property"). Dkt. 1-5 at 2-3. The relevant, undisputed timeline of events concerning the property is as follows:

July 31, 2006: Jose and Maria Ramirez ("the Borrowers") obtained a home equity loan ("the Loan") from New Century Mortgage Corporation ("New Century") in the original principal amount of $82,400.00. Dkt. 18-1. The Loan was secured by a Texas Home Equity Security Instrument ("the Lien"), recorded in the Harris County Property Records as document 2006010298. Dkt. 18-2. The Lien contains an optional acceleration clause. See id. § 21.

October 7, 2010: Deutsche Bank National Trust Company, as Trustee for Ameriquest Mortgage Securities, Inc., Asset-Backed Pass-Through Certificates, Series 2004-R7 erroneously filed a Rule 736 action (Cause No. 2010-66265) seeking an Order for Foreclosure for the property located at 10813 Seneca Street, Houston, Texas 77016. Dkt. 20-5.

December 30, 2010: The former mortgage servicer for the Loan sent the Borrowers a Notice of Default and Intent to Accelerate. Dkt. 18-3.

February 5, 2014: The Lien is transferred to U.S. Bank and recorded in the Harris County Property Records as document 20140074971. Dkt. 18-8.

May 12, 2014: Pursuant to a Home Equity Foreclosure Order, issued from the Court of Harris County on January 14, 2011 under Cause No. 2010-66265, a Notice of Foreclosure Sale of the Property ("Notice of Sale") was filed with the Harris County Clerk (Dkt. 18-4), even though Cause No. 2010-66265 did not concern the Property. See Dkt. 20-5.

June 3, 2014: U.S. Bank purportedly purchases the Property at the Foreclosure Sale ("the Sale"). Dkt. 18-5. However, the Sale was conducted pursuant to Cause No. 2010-66265 (Dkt. 20-5), which did not concern the Property.

June 6, 2014: The Foreclosure Sale Deed is recorded in the Harris County Property Records as document 20140243733. Id.

August 7, 2015: The Sale is voided because "the Substitute Trustee did not have the authority to conduct the sale since the mortgagee has not obtained an Order Allowing Foreclosure pursuant to Rule 736 of the Texas Rules of Civil Procedure." Dkt. 18-6. An Affidavit Concerning Void June 3, 2014 Foreclosure Sale Deed was recorded in the Harris County Property Records as document 20150301596. Id.

March 2, 2017: Ocwen sends a Notice of Default to the Borrowers. Dkt. 20-8 at 49-61.

April 21, 2017: Ocwen and U.S. Bank's Foreclosure Counsel sends a Notice of Acceleration to Borrowers. Id. at 63-66.

June 7, 2017: U.S. Bank files an Application for an Expedited Order Under Rule 736, seeking to foreclose on the Property ("Rule 736 Suit"). Id.

December 5, 2017: Ther & Co. purchases the Property at an HOA Foreclosure Sale for $2,000. Dkt. 18-9.

July 2, 2018: Ther & Co. files suit against U.S. Bank in the 189th Judicial District Court in Harris County, Texas seeking to quiet title and for declaratory judgment that defendants' foreclosure action violates the statute of limitations set forth in Texas Civil Practice and Remedies Code section 16.035, because more than four years have passed since accrual. Dkt. 1-5 at 4-5. Ther & Co. also seeks injunctive relief. Id. at 8. In the alternative, Ther & Co. seeks an accounting and equitable redemption. Id. at 6-8.

August 23, 2018: Defendants removed the instant suit to this court following service on July 27, 2018. Dkt. 1.

Ther & Co. seeks partial summary judgment on its declaratory relief and quiet title claims, both of which are based on its argument that U.S. Bank's Rule 736 Suit violates the four-year statute of limitations. Dkt. 18. Defendants seek summary judgment on all of Ther & Co.'s claims, arguing that the quiet title claim fails because the statute of limitations has not run; that there can be no claims for declaratory and injunctive relief (or attorney's fees) where the underlying quiet title claim fails; that Ther & Co. is not entitled to an accounting; and that Ther & Co.'s equitable redemption claim fails because it has waived its right by failing to pay any amount due on the Lien. Dkt. 20.

II. LEGAL STANDARD

Summary judgment is proper only when "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). "Once the moving party has demonstrated the absence of a material fact issue, the non-moving party must 'go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial.'" Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc)). "This burden will not be satisfied by 'some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.'" Id. (quoting Little, 37 F.3d at 1075). "[O]n summary judgment, 'the evidence of the nonmovant is to be believed, and all justifiable inferences are to bedrawn in his or her favor.'" Waste Mgmt. of La., L.L.C. v. River Birch, Inc., 920 F.3d 958, 972 (5th Cir. 2019) (quoting Tolan v. Cotton, 572 U.S. 650, 656, 134 S.Ct. 1861, 188 L. Ed. 2d 895 (2014) (per curiam)).

III. ANALYSIS

A. The Statute of Limitations Has Not Run on Defendants' Foreclosure Action

Ordinarily, the four-year statute of limitations period to foreclose a real property lien "does not begin to run until the maturity date of the last note, obligation, or installment." Tex. Civ. Prac. & Rem. Code § 16.035(e). Where, as here, "a note or deed of trust secured by real property contains an optional acceleration clause, . . . 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) (citations omitted). "Effective acceleration requires two acts: (1) notice of intent to accelerate, and (2) notice of acceleration." Id. "Both notices must be 'clear and unequivocal.'" Id. (citing Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 892 (Tex. 1991)). "Even when a noteholder has accelerated a note upon default, the holder can abandon acceleration if the holder continues to accept payments without exacting any remedies available to it upon declared maturity." Id. at 566-67 (citing City Nat'l Bank v. Pope, 260 S.W. 903, 905 (Tex. App.—San Antonio 1924, no writ)).

Here, there is no dispute that the December 30, 2010 Notice of Default and Intent to Accelerate (Dkt. 18-3) was "clear and unequivocal." However, effective acceleration also requires "clear and unequivocal" notice of acceleration. Holy Cross, 44 S.W.3d at 566. Defendants contend that they never sent a notice of acceleration to the Borrowers until April 21, 2017. Dkt. 22 at 3. Ther & Co. asserts that the June 3, 2014 Notice of Sale "constitutes as [sic] unequivocal notice of acceleration under Brown, Meadowbrook Gardens, and McLemore." Dkt. 18 at 7. As an initial matter, the court notes that the Notice of Sale is dated May 12, 2014, not June 3, 2014. Dkt. 18-4.The court believes that May 12, 2014, is the date that Ther & Co. intended to reference because in its reply, Ther & Co. asserts that "acceleration occurred when the Notice of Sale was recorded in the public records and mailed to the borrower." Dkt. 23 at 2. This is frivolity.¹

The Affidavit Concerning Void June 3, 2014 Foreclosure Sale Deed, recorded in the Harris County Property Records as document 20150301596, states that "the Foreclosure Sale Deed dated June 3, 2014, is void and of no force and effect whatsoever and that all acts conducted with regard to the foreclosure sale of June 3, 2014, are hereby rescinded." Dkt. 18-6. "[A]ll acts" would include the May 12, 2014 Notice of Sale. Ther & Co. points this court to no case law suggesting otherwise. Because this is Ther & Co.'s only argument that the statute of limitations has run, the court finds that the statute of limitations did not start until April 21, 2017, when defendants sent a notice of acceleration to the Borrowers. Dkt. 22 at 3. Four years have not yet passed, meaning the four-year limitations period has not run, so defendant is entitled to foreclose on the Property.

B. Ther & Co.'s Quiet Title Claim Fails

Ther & Co.'s quiet title claim is based entirely up on its argument that "the power of saleunder the loan agreement and Texas law is void due to the expiration of the statute of limitations." Dkt. 18 at 6. Because that argument fails, see supra § III.A., the quiet title claim fails.

C. Ther & Co. Is Not Entitled to Declaratory or Injunctive Relief, or Attorney's Fees

Ther and Co.'s claims for declaratory and injunctive relief and attorney's fees are premised on its quiet title action. Because that underlying claim fails, see supra § III.A., these claims fail also. See, e.g., Sivertson v. Citibank, N.A., 390 F. Supp. 3d 769, 793 (E.D. Tex. 2019) (finding that "because Plaintiff has failed to state any valid causes of action against Defendant, there is no underlying cause of action...