Charles Boren v. US National Bank Associati
2015 U.S. App. LEXIS 18800
| 5th Cir. | 2015Background
- In 2005 the Borens obtained a home-equity note for $640,000 secured by a deed of trust; Home123 later assigned the loan to U.S. Bank as trustee.
- After payments stopped in Feb 2009, U.S. Bank sent a Notice of Default and on May 8, 2009 sent a Notice of Acceleration declaring the loan matured.
- U.S. Bank repeatedly sought nonjudicial foreclosure via Texas Rule 736; each effort prompted the Borens to file petitions contesting foreclosure, which dismissed the Rule 736 proceedings; the Borens repeatedly nonsuited those petitions.
- U.S. Bank sent a Second Notice of Default in May 2010 stating the loan could be cured by paying the past-due monthly arrearage (not the full accelerated balance) and warned it would accelerate if not cured; a Second Notice of Acceleration followed in Sept. 2010; similar third notices followed in 2012–2013.
- U.S. Bank did not file a judicial foreclosure counterclaim until July 24, 2013, more than four years after the May 2009 acceleration; the district court granted summary judgment to U.S. Bank, holding the bank abandoned its initial acceleration and thus the limitations period did not bar foreclosure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 4-year limitations period under Tex. Civ. Prac. & Rem. Code § 16.035 bars U.S. Bank’s judicial foreclosure counterclaim | Borens: statute accrued on May 2009 acceleration; claim time-barred because bank sued after four years | U.S. Bank: it abandoned its May 2009 acceleration by later notices (notably May 2010) that allowed curing by arrearage, so limitations restarted after subsequent acceleration | Court held bank abandoned the initial acceleration by its May 2010 notice, so foreclosure was not time-barred |
| Whether a lender may unilaterally abandon an earlier acceleration | Borens: argued abandonment requires agreement or clear action satisfying Texas law | U.S. Bank: a lender may unilaterally abandon acceleration by conduct/notice indicating it will accept less than full balance to reinstate original terms | Court held Texas law permits unilateral abandonment and that U.S. Bank’s Second Notice showed intent to abandon |
| What acts suffice to abandon acceleration | Borens: contested sufficiency of U.S. Bank’s Second Notice of Default | U.S. Bank: informing borrower that loan could be cured by paying arrearage and accepting payments is sufficient | Held abandonment can be effected by clear notice requesting less than full balance and conduct inconsistent with acceleration |
| Effect of statutory guidance enacted after briefing (Tex. Civ. Prac. & Rem. Code § 16.038) | Borens: argued new statute may limit retroactive reliance | U.S. Bank: statute provides a mechanism but does not displace prior methods | Court noted statute provides a notice-based method but is not exclusive and did not need to decide retroactivity |
Key Cases Cited
- Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex. 2001) (accrual occurs when holder actually exercises optional acceleration and requires clear notice of intent and acceleration)
- EMC Mortg. Corp. v. Window Box Ass’n, Inc., 264 S.W.3d 331 (Tex. Ct. App. 2008) (installment-note accrual rules and requirement of clear default and acceleration notices)
- Khan v. GBAK Props., 371 S.W.3d 347 (Tex. Ct. App. 2012) (abandonment of acceleration restores original maturity date)
- Swoboda v. Wilshire Credit Corp., 975 S.W.2d 770 (Tex. Ct. App. 1998) (a creditor may revoke acceleration if debtor has not detrimentally relied)
- G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502 (Tex. 2015) (waiver can be express or implied; waiver is a question of law when facts undisputed)
- Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773 (Tex. 2008) (elements of waiver under Texas law)
- Thompson v. Bank of Am. Nat. Ass’n, 783 F.3d 1022 (5th Cir. 2015) (summarizing Texas waiver principles in the waiver/abandonment context)