Lee A. Hardy and Polly Hardy v. Wells Fargo Bank, N.A., 01-12-00945-CV

Background

Plaintiffs Lee and Polly Hardy executed a deed of trust with an optional acceleration clause; Washington Mutual accelerated the debt in July 2005.
Wells Fargo (successor) and the Hardys executed two written Stipulated Partial Reinstatement/Repayment Agreements (PRRAs) dated April 2, 2007 and May 2, 2008, each reciting consideration and barring foreclosure while the Hardys complied.
PRRAs included language stating acceptance of payments would not be deemed to affect acceleration if the Hardys defaulted, and that Wells Fargo retained its rights under the Note and Deed of Trust.
Wells Fargo foreclosed on the property on March 2, 2010; a third-party purchaser (David Brown) paid off the secured debt and excess sale proceeds were later paid to the Hardys.
The trial court granted summary judgment for Wells Fargo on the Hardys’ wrongful-foreclosure claim. The First Court of Appeals panel issued an opinion finding genuine issues of material fact (including whether the PRRAs halted the statute of limitations). Wells Fargo filed this motion for rehearing arguing the PRRAs renewed/extended the debt and tolled limitations and that the Hardys lack damages (unclean hands).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the April 2, 2007 and May 2, 2008 PRRAs halted or restarted the statute of limitations for enforcing the contractual power of sale	PRRAs did not stop the limitations because Wells Fargo never permanently abandoned acceleration	PRRAs were enforceable renewals/extensions creating new obligations and tolling/resetting limitations while parties performed	The appellate panel concluded there were genuine fact issues and effectively treated the PRRAs as not conclusively halting limitations (Wells Fargo seeks rehearing)
Whether Wells Fargo could obtain summary judgment on wrongful-foreclosure because limitations had not run	Limitations had run from original acceleration (or factual dispute exists)	PRRAs created new enforceable promises so limitations ran anew and foreclosure was timely; trial court summary judgment was proper	The panel declined to affirm summary judgment (Wells Fargo requests rehearing to reverse that determination)
Whether the Hardys can recover damages after foreclosure	Hardys claim wrongful foreclosure caused damages	Wells Fargo argues the sale paid the secured debt and the Hardys accepted excess proceeds, so they have no damages and come with unclean hands	The panel found material factual disputes as to the wrongful-foreclosure claim (Wells Fargo disputes this and urges rehearing)
Effect of PRRA language disclaiming waiver of rights and reserving re-acceleration	Such language preserves Wells Fargo’s acceleration rights and shows PRRAs didn’t suspend limitations	Such language is consistent with an agreement that temporarily forbear foreclosure while creating new obligations; non-waiver clauses don’t prevent creating a new contract for limitations purposes	The panel treated the legal effect of the PRRAs (including that language) as a fact-question for resolution (Wells Fargo argues law supports tolling/reset)

Key Cases Cited

Natural Gas Pipeline Co. of Am. v. Pool, 124 S.W.3d 188 (Tex. 2003) (statutes of limitation objectives and accrual principles)
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex. 2001) (accrual when holder actually exercises option to accelerate)
Novosad v. Svrcek, 102 S.W.2d 393 (Tex. 1937) (extension of time for performance creates new contract and resets limitations)
Hoarel Sign Co. v. Dominion Equity Corp., 910 S.W.2d 140 (Tex. App.—Amarillo 1995) (mutual agreement to extend note creates new contract and new limitations period)
Sefek v. Helvey, 601 S.W.2d 168 (Tex. Civ. App.—Corpus Christi 1980) (no formal requirements for renewal/extension; promise must show willingness to pay)
McNeill v. Simpson, 39 S.W.2d 835 (Tex. Comm’n App. 1931) (limitations on new promise to pay run from when performance is due)