867 F.3d 593
5th Cir.2017Background
- In 1998 Alexander obtained a Texas home-equity loan from Wells Fargo’s predecessor; the loan documents allegedly lacked a required Fair Market Value Acknowledgment signed by both parties.
- Alexander discovered the omission years later, notified Wells Fargo, and made repeated payments and communications after falling into default; Wells Fargo pursued foreclosure multiple times.
- Alexander sued in state court (praying for injunctions, production of documents, damages, and forfeiture) shortly before scheduled foreclosure; Wells Fargo removed to federal court and the district court dismissed under Rule 12(b)(6) as time-barred under the Fifth Circuit’s Preister decision.
- After dismissal, the Texas Supreme Court issued Wood and Garofolo (May 20, 2016), altering the legal landscape on Section 50 claims: Wood held no statute of limitations applies to Section 50(c) quiet-title actions; Garofolo constrained constitutional forfeiture claims and treated forfeiture as a contractual remedy enforceable via breach of contract.
- Alexander moved under Rule 59 to alter the judgment based on Wood; the district court denied relief. On appeal the Fifth Circuit reviewed whether the post-judgment change in Texas law required reinstatement of Alexander’s claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wood’s holding that Section 50(c) quiet-title actions are not time-barred warrants reopening the dismissed claim | Alexander contends her pro se complaint pleaded a Section 50(c) quiet-title claim and Wood represents an intervening change in controlling law requiring reinstatement | Wells Fargo says Alexander did not plead quiet title (sought damages/other relief incompatible with quiet title) and Wood applies only to pure quiet-title claims | Court: Liberally construing pro se complaint, Alexander adequately pled a Section 50(c) claim; Wood is an intervening change and district court erred—quiet-title claim reinstated |
| Whether forfeiture remedy under Section 50(a)(6)(Q)(x) survives limitations or is independently actionable | Alexander argues forfeiture protection should be extended by Wood or that later events supplied a timely claim | Wells Fargo argues forfeiture is a contractual remedy; any breach occurred at loan origination (1998) and is time-barred | Court: Garofolo controls; forfeiture is a contractual remedy enforceable by breach claim. Alexander’s forfeiture claim accrued at origination (or discovery) and is time-barred—forfeiture claim remains dismissed |
| Whether a lender’s post-origination failure to honor loan terms creates a constitutional violation independent of contract | Alexander implies lender’s failures justify constitutional remedies | Wells Fargo relies on Garofolo to say Section 50(a) terms are not independent constitutional rights; post-origination failures are contractual | Court: Garofolo and Wood together mean Section 50(a) terms are necessary for a valid lien, but failure to honor them post-origination is contractual; Wood confirms invalid liens remain invalid until cured, supporting quiet-title relief but not automatic constitutional forfeiture |
| Whether Rule 59(e) relief is appropriate based on intervening state-law decisions | Alexander invoked Rule 59(e) citing Wood as intervening change | Wells Fargo opposed reopening; argued claims were plead-deficient or still barred | Court: Rule 59(e) relief warranted as to quiet-title claim because Wood changed controlling law; not warranted for forfeiture claim (still barred by limitations) |
Key Cases Cited
- Preister v. JP Morgan Chase Bank, N.A., 708 F.3d 667 (5th Cir. 2013) (held residual four-year limitations applied to Section 50 claims — the court’s earlier “Erie guess”)
- Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542 (Tex. 2016) (held an action to quiet title under Tex. Const. art. XVI § 50(c) is not subject to a statute of limitations; lien securing noncompliant loan is invalid until cured)
- Garofolo v. Ocwen Loan Servicing, L.L.C., 497 S.W.3d 474 (Tex. 2016) (held Section 50(a) terms are not independent constitutional causes of action; forfeiture is a contractual remedy enforceable via breach of contract)
- Stine v. Stewart, 80 S.W.3d 586 (Tex. 2002) (breach-of-contract claims accrue when contract is breached; four-year limitations)
- Barker v. Eckman, 213 S.W.3d 306 (Tex. 2006) (discusses accrual for serial breaches and discovery-rule principles)