Alice M. Wood and Daniel L. Wood v. HSBC Bank USA, N, A. and Ocwen Loan Servicing, L.L.C
2014 Tex. App. LEXIS 8382
| Tex. App. | 2014Background
- In 2004 Alice and Daniel Wood obtained a $76,000 home-equity loan secured by a first lien on their homestead; the transaction closed July 2, 2004.
- The Woods later alleged the loan violated multiple provisions of Tex. Const. art. XVI, § 50(a)(6) (fees and other requirements) and alleged breach of the security instrument (fees >3%).
- On March 16, 2012 the Woods sent a Notice to HSBC (then holder) demanding cure; HSBC did not respond. The Woods filed suit July 9, 2012 seeking forfeiture, damages, and declaratory relief voiding the lien.
- HSBC and Ocwen moved for traditional and no-evidence summary judgment, asserting the claims were barred by the four-year statute of limitations (Tex. Civ. Prac. & Rem. Code § 16.051); the trial court granted summary judgment.
- The Fourteenth Court of Appeals considered whether constitutionally noncompliant home-equity liens are void or voidable, when causes of action accrued, and whether the Woods’ claims were subject to the 4-year residual limitations period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §50(a)(6) claims are time-barred by §16.051 | Woods: a noncompliant lien is "void" under §50(c), so action to cancel is not governed by the 4‑year residual limitations | HSBC/Ocwen: a noncompliant lien is "voidable" (cure available), so §16.051 applies and claims are time‑barred | Court: liens that violate §50(a)(6) are voidable (cure provision), §16.051 applies, claims accrued at closing, and are time‑barred |
| Whether declaratory action to cancel lien is an action for recovery of real property (thus exempt from §16.051) | Woods: claim seeks equitable title / cancellation and therefore is an action for recovery of real property, not subject to the 4‑year rule | HSBC/Ocwen: cancellation is equitable, does not support trespass to try title, so §16.051 applies | Court: cancellation does not support trespass to try title; action is equitable and §16.051 applies |
| When the §50(a)(6) and breach claims accrued | Woods: accrual occurred only after lender failed to cure (after notice), so later accrual (2012) | HSBC/Ocwen: accrual occurred at closing (July 2, 2004) because the injury and facts existed then | Court: accrual date is closing (July 2, 2004); limitations expired July 2, 2008; Woods sued in 2012, so claims barred |
| Whether breach-of-contract claim (fees >3%) is tolled by notice requirement in security instrument | Woods: breach did not accrue until they gave notice (Mar 16, 2012) as contract required prior notice | HSBC/Ocwen: breach occurred when the excessive fees were charged at closing; notice does not delay accrual beyond the limitations period | Court: breach accrued when excessive fees were charged (closing); Woods’ delay to demand/court exceeded 4 years, claim barred |
Key Cases Cited
- Doody v. Ameriquest Mortgage Co., 49 S.W.3d 342 (Tex. 2001) (interpreting §50 cure provision and effect of cure on lien validity)
- Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667 (5th Cir. 2013) (held noncompliant home‑equity liens are voidable; limitations apply)
- Williams v. Wachovia Mortg. Corp., 407 S.W.3d 391 (Tex. App.—Dallas 2013) (adopted Priester reasoning; lien voidable and claims subject to limitations)
- Etan Indus., Inc. v. Lehmann, 359 S.W.3d 620 (Tex. 2011) (cause of action accrues when wrongful act causes legal injury)
- KPMG Peat Marwick v. Harrison Cty. Hous. Fin. Corp., 988 S.W.2d 746 (Tex. 1999) (summary judgment burden to conclusively prove accrual and negate discovery rule for limitations defense)
- Brazzel v. Murray, 481 S.W.2d 801 (Tex. 1972) (distinguishing void acts from voidable acts; voidable acts may be ratified or cured)