917 F.3d 831
5th Cir.2019Background
- In 2005 Esther Randle Moore and her husband executed a Texas home-equity note and security instrument; the loan later was held by U.S. Bank (the Bank) and serviced by Select Portfolio Servicing (SPS).
- Moore defaulted after her husband’s death; the Bank sent a notice of acceleration in 2010 and later filed suit leading to an agreed foreclosure judgment in 2011; Moore vacated the property in 2012.
- SPS sent a November 2012 notice of default seeking less than the full debt and warning of re-acceleration if not cured, which could be read as abandoning the 2010 acceleration.
- Moore conveyed the property to Scojo Solutions, LLC in March 2015, which then transferred it to Jatera Corporation; Jatera sued to declare the lien void under Texas’s 4-year statute of limitations for foreclosure actions.
- Plaintiffs (Jatera and Moore) argued the Bank could not abandon the 2010 acceleration because Moore had detrimentally relied on that acceleration; defendants moved for summary judgment asserting the lender may unilaterally rescind acceleration.
- The district court denied appellants’ summary judgment, granted appellees’, and held (1) Moore lacked standing to assert claims because she no longer held interest in the property, and (2) even if a detrimental-reliance exception exist, Jatera failed to prove detrimental reliance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Texas law recognizes a detrimental-reliance exception that prevents a lender from unilaterally rescinding an acceleration | Moore (and thus Jatera via assignment) argued Moore detrimentally relied on the 2010 acceleration, so the Bank could not abandon it | Bank/SPS argued a lender may unilaterally rescind or waive acceleration and statute §16.038 confirms rescission controls | Court held Texas does not recognize a detrimental-reliance exception to unilateral rescission of acceleration |
| Whether Jatera/Moore actually detrimentally relied on the 2010 acceleration | Plaintiffs asserted facts (vacating house, leasing) showed reliance | Defendants disputed that reliance and argued Moore’s later actions and transfers undermined standing/assignment | Court did not reach reliance merits because no exception exists; district court had found no proof of reliance for Jatera |
| Standing of Moore to challenge the lien after conveying the property | Plaintiffs maintained Moore’s interest and claims were assigned to Jatera | Defendants pointed to the conveyance and district-court finding that Moore no longer held property interest | Court affirmed that Moore lacked standing in district court and that Jatera failed to establish a viable detrimental-reliance claim |
| Proper application of the 4-year statute of limitations for foreclosure under Texas law | Plaintiffs argued the limitations period began at 2010 acceleration and could not be tolled by unilateral rescission if reliance occurred | Defendants argued a rescission that requests less than full payment restarts limitations under existing Texas precedent and §16.038 | Court applied Texas law and statutory interpretation to reject the detrimental-reliance exception and affirmed judgment for defendants |
Key Cases Cited
- Erie R.R. Co. v. Tompkins, 304 U.S. 64 (federal diversity choice-of-law principle)
- Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex. 2001) (acceleration accrual rule for optional acceleration clauses)
- Boren v. U.S. Nat’l Bank Ass’n, 807 F.3d 99 (5th Cir. 2015) (abandonment of acceleration suspends limitations period)
- Martin v. Fed. Nat’l Mortg. Ass’n, 814 F.3d 315 (5th Cir. 2016) (requesting less than full debt can constitute abandonment of acceleration)
- Swoboda v. Wilshire Credit Corp., 975 S.W.2d 770 (Tex. App. 1998) (dicta suggesting detrimental-reliance limits rescission)
- Acker v. Texas Water Comm’n, 790 S.W.2d 299 (Tex. 1990) (statutory-construction principle regarding legislative knowledge of case law)
- Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433 (Tex. 2009) (courts should enforce statutes as written)