641 F. App'x 430
5th Cir.2016Background
- In 2005 the Nunnerys executed a promissory note secured by a deed of trust; Deutsche Bank eventually obtained the loan and Ocwen serviced it.
- The Nunnerys defaulted (payments stopped by May 1, 2009); a prior servicer accelerated the loan and scheduled foreclosure in 2009.
- During an earlier state-court suit contesting foreclosure authority, defendants mailed two notices rescinding/abandoning acceleration (one in 2012, another in 2013); the Nunnerys voluntarily nonsuited that suit.
- The Nunnerys later remained in arrears; Ocwen/Deutsche Bank issued a new notice accelerating the note effective January 13, 2014 and scheduled a foreclosure sale.
- The Nunnerys filed the present suit to enjoin foreclosure; Ocwen removed to federal court and moved for summary judgment, which the district court granted. The Nunnerys appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prior 2009 acceleration was effectively rescinded/abandoned so statute of limitations did not bar foreclosure | Nunnerys: A lender cannot unilaterally rescind acceleration; thus limitations ran and foreclosure is time-barred | Ocwen: A lender may unilaterally abandon acceleration by clear notice; Ocwen sent express notices abandoning acceleration, restarting limitations only upon re-acceleration | Court: Lender may unilaterally abandon acceleration; Ocwen’s express notices rescinded acceleration so limitations did not bar foreclosure |
| Whether failure to seek judicial foreclosure in the earlier suit barred Ocwen from seeking foreclosure now (compulsory-counterclaim argument) | Nunnerys: The lender’s foreclosure claim was a compulsory counterclaim in the earlier suit and is therefore barred | Ocwen: Rule 13(a) cannot be applied to strip a lender of its substantive right to choose judicial or nonjudicial foreclosure (Kaspar rule) | Court: Rule 13(a) does not apply here; lenders don’t forfeit election of foreclosure remedy by not moving for judicial foreclosure earlier; Ocwen may proceed |
Key Cases Cited
- Boren v. United States Nat’l Bank Ass’n, 807 F.3d 99 (5th Cir. 2015) (endorsing that under Texas law a lender may unilaterally abandon acceleration by notice absent borrower objection or detrimental reliance)
- Douglas v. NCNB Tex. Nat’l Bank, 979 F.2d 1128 (5th Cir. 1993) (applying Kaspar rule: lender has substantive right to elect judicial or nonjudicial foreclosure and debtor cannot force judicial foreclosure)
- Kaspar v. Keller, 466 S.W.2d 326 (Tex. Civ. App.—Waco 1971) (mortgagor cannot use suit to compel mortgagee into judicial foreclosure and thereby nullify mortgagee’s remedy choice)
- Ingersoll–Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (Tex. 1999) (discussing compulsory-counterclaim rules under Texas procedural law)