HSBC Bank USA, N.A. v. Kenneth Crum
907 F.3d 199
| 5th Cir. | 2018Background
- In 2004 Crum executed a home equity note and security instrument on his Texas property; HSBC (as Trustee) held the note and security interest by 2009.
- HSBC’s servicer accelerated the loan on June 10, 2009; under Texas law the foreclosure claim would accrue then and the 4-year limitations period would run to June 10, 2013.
- Crum filed Chapter 7 bankruptcy on June 3, 2010 (discharged Oct. 7, 2010), and separately sued in state court in 2011 to prevent foreclosure; that state suit was resolved by summary judgment in 2012.
- Servicers sent various notices 2013–2014 (an October 15, 2013 notice curing less than full amount that effectively abandoned acceleration; later re-acceleration and final acceleration notices in 2014).
- HSBC sued to foreclose on Sept. 29, 2014 and moved for summary judgment; the district court granted summary judgment for HSBC.
- Crum appealed, arguing (1) lack of standing/ownership of the note, (2) statute-of-limitations bar (untimely suit), and (3) final judgment defective under Texas Rule of Civil Procedure 309.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / ownership of the Note | HSBC: it has owned and held the Note since 2009 and submitted undisputed proof of ownership. | Crum: a 2013 assignment shows Bank of America assigned the Note to Nationstar, implying HSBC lacked ownership when suit was filed. | Held: HSBC proved ownership; Crum failed to raise a genuine dispute. The 2013 Assignment did not show Bank of America ever owned the Note. |
| Timeliness — effect of acceleration and abandonment | HSBC: limitations tolled by bankruptcy stay and by the pending state-court Rule 736 proceeding, so suit filed 2014 was timely. | Crum: tolling from bankruptcy was only 126 days (not 127), and abandonment occurred after limitations expired, making suit untimely. | Held: Texas common-law tolling (incorporated via 11 U.S.C. §108(c)) tolled the limitations period for the entire bankruptcy stay including filing and dismissal days (127 days); suit was timely. |
| Method to compute tolling during bankruptcy stay | HSBC: apply Texas common-law tolling by counting each day the creditor was prevented from suing (including filing and dismissal days). | Crum: invoke rules (Fed. R. Civ. P. 6 / Fed. R. Bankr. P. 9006 / Tex. Gov’t Code) to compute days differently, producing 126 days. | Held: court applied common-law approach (count each day during which remedy was suspended, inclusive) aligning with Fifth Circuit practice; 127 days tolled. |
| Compliance with Texas Rule 309 re: final judgment | HSBC: argues Crum waived the Rule 309 challenge by not raising it below. | Crum: final judgment failed to comply with Rule 309 so judgment invalid. | Held: Crum waived the Rule 309 objection by failing to raise it in district court or in post-judgment motions; objection forfeited. |
Key Cases Cited
- McCoy v. City of Shreveport, 492 F.3d 551 (5th Cir.) (standard of review for summary judgment)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (summary judgment burden and evidence view)
- Little v. Liquid Air Corp., 37 F.3d 1069 (5th Cir.) (insufficiency of scintilla of evidence to defeat summary judgment)
- Windland v. Quarterman, 578 F.3d 314 (5th Cir.) (treating ‘pending’ as inclusive of filing and resolution dates for tolling)
- Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex.) (optional-acceleration clause accrual rule)
- Hughes v. Mahaney & Higgins, 821 S.W.2d 154 (Tex.) (Texas common-law tolling principle)