King v. Select Portfolio Servicing, Inc.
4:15-cv-00830
E.D. Tex.Dec 4, 2017Background
- John C. King (plaintiff) owns property in Frisco, Texas secured by a 2006 deed of trust and promissory note executed by his then-wife; he stopped paying in April 2008.
- A law firm sent a Notice of Acceleration and Foreclosure in November 2008 demanding the full loan balance.
- Subsequent communications: a December 2010 notice seeking a cure amount (less than full balance), multiple notices in 2012 seeking cure amounts, and an October 2014 “Rescission of Acceleration.”
- King filed this suit seeking declaratory relief/quiet title; he filed Chapter 7 bankruptcy on November 3, 2015 and did not list the lawsuit as an asset in the bankruptcy schedules (but referenced it elsewhere).
- Defendants moved for summary judgment arguing (1) King lacks standing because the claim belonged to the bankruptcy estate, (2) King is judicially estopped by nondisclosure in bankruptcy, and (3) any acceleration was timely abandoned so the four-year foreclosure statute of limitations never ran.
- The court granted defendants’ summary judgment motion, concluding the post-2008 notices (Dec. 2010 and 2012) abandoned the 2008 acceleration so the limitations period did not expire; it declined to decide standing/judicial-estoppel as a matter of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the lawsuit belonged to the bankruptcy estate / standing | King says the suit sought only declaratory relief regarding his homestead and the trustee told him the estate had no interest, so it was not an estate asset | Defendants say all causes of action vested in the estate on filing and King failed to list the claim | Court found record insufficient to resolve as a matter of law; did not grant summary judgment on standing |
| Whether King is judicially estopped from litigating the claim due to nondisclosure in bankruptcy | King says nondisclosure was inadvertent based on trustee communications absolving estate interest | Defendants say omission was intentional and bars assertion of inconsistent position | Court found there was insufficient evidence of intentional concealment and denied summary judgment on judicial estoppel |
| Whether the November 2008 acceleration matured the debt and started the 4-year foreclosure limitations period | King admits the November 2008 notice accelerated the loan and demands full balance but argues later actions made acceleration void | Defendants assert the 2008 acceleration accrued the cause of action unless it was abandoned earlier | Court treated Nov. 2008 as the accrual date but analyzed abandonment by later notices |
| Whether later notices abandoned the 2008 acceleration and thus prevented the statute of limitations from expiring | King contends later rescission was untimely or ineffective and that limitations lapsed | Defendants argue December 2010 and 2012 notices (and rescission in 2014) sought less-than-full payment and expressly allowed curing, which unequivocally abandoned prior acceleration and restarted any limitations period | Court held the December 2010 notice and the 2012 notices demonstrated abandonment of the 2008 acceleration; the four-year limitations period therefore never expired and summary judgment for defendants was granted |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation and standard)
- Anderson v. Liberty Lobby, 477 U.S. 242 (genuine issue of material fact standard)
- Kane v. Nat’l Union Fire Ins. Co., 535 F.3d 380 (5th Cir.) (bankruptcy estate includes debtor’s causes of action)
- In re Superior Crewboats, Inc., 374 F.3d 330 (5th Cir.) (judicial estoppel factors in bankruptcy context)
- Scarano v. Cent. R.R. Co., 203 F.2d 510 (3d Cir.) (judicial estoppel origin/explanation)
- Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex.) (effect of statute of limitations on foreclosure after acceleration)
- Martin v. Fed. Nat’l Mortg. Ass’n, 814 F.3d 315 (5th Cir.) (requesting less-than-full payment can show abandonment of prior acceleration)
- Boren v. U.S. Nat. Bank Ass’n, 807 F.3d 99 (5th Cir.) (same: requesting less-than-full payment evidences waiver/abandonment)
- Leonard v. Ocwen Loan Servicing, L.L.C., [citation="616 F. App'x 677"] (5th Cir.) (lender may unilaterally abandon acceleration)