Smith v. JPMorgan Chase Bank, National Ass'n
825 F. Supp. 2d 859
S.D. Tex.2011Background
- Smith sues JPMorgan Chase Bank for alleged unconstitutional home equity lien on Smith's Texas homestead.
- JPMC admits potential constitutional violation regarding Section 50(a)(6)(K).
- Texas constitution restricts home equity liens to one permitted lien and requires cure within 60 days after notice.
- Smith seeks to quiet title, asserting lien is void ab initio and equitable relief is appropriate.
- Questions arise whether limitations law applies to constitutional claims on home equity liens and whether cure provisions affect timeliness.
- Court is asked to determine the proper limitations framework and whether the four-year residual statute applies to Smith's equitable quiet-title claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the lien is void ab initio under Tex. Const. art. XVI, § 50(a). | Smith's lien violative of §50(a)(6)(K) renders it void. | JPMC contends no relief is available due to limitations; lien validity may be cured later. | Lien is void ab initio; the cure provisions may salvaged only upon timely cure. |
| Whether limitations bars Smith’s equitable quiet-title claim. | Limitations should not bar an equitable action to remove a cloud when the lien is void. | Texas four-year residual statute applies to claims absent a specific limitations period; accrual date disputed. | Rivera-based four-year limit does not apply; no limitations bar to equitable quiet-title claim under these facts. |
| What is the proper limitations framework for home equity lien claims under Texas law? | Constitutional cure provisions preserve lender rights without prejudicing borrower remedies. | Residual four-year statute or other limitations bars may apply to claims. | Limitations cannot bar a claim to quiet title based on a void lien; cure provisions govern remedy and timing. |
| Do notice and cure provisions affect timeliness of Smith’s claim? | Notice in 2008 triggered 60-day cure period; failure to cure affects enforceability, not timeliness of equitable claim. | Failure to cure could bar relief; however, cure occurring later may salvage lien. | Sixty-day cure framework governs remedy; timeliness of cure does not bar the equitable claim to quiet title at this stage. |
Key Cases Cited
- Moore v. Chamberlain, 109 Tex. 64, 195 S.W. 1135 (Tex. 1917) (voidness of noncompliant liens on homestead)
- Florey v. Estate of McConnell, 212 S.W.3d 439 (Tex.App.-Austin 2006) (lien validity principles for homestead claims)
- Texas Land & Loan Co. v. Blalock, 76 Tex. 85, 13 S.W. 12 (Tex. 1890) (early teaching that declarations contrary to fact cannot encumber homestead)
- Doody v. Ameriquest Mortg. Co., 49 S.W.3d 342 (Tex. 2001) (cure provisions apply to remedies beyond principal balance)
- York v. Flowers, 872 S.W.2d 13 (Tex. App.-San Antonio 1994) (residual statute excludes actions for recovery of real property)
- Rivera v. Countrywide Home Loans, 262 S.W.3d 834 (Tex.App.-Dallas 2008) (case addressing accrual under residual statute; not controlling here)
- In re Ortegon, 398 B.R. 431 (Bankr.W.D.Tex. 2008) (early bankruptcy ruling applying residual statute in similar context)
- In re Chambers, 419 B.R. 652 (Bankr.E.D.Tex. 2009) (followed Ortegon; discusses accrual and limitations framework)
- Schanzle v. JPMC Specialty Mortgage LLC, No official reporter; 2011 WL 832170 (Tex.App.-Austin 2011) (Texas appellate case cited by lender on limitations)