Wilmington Trust, Nat'l Ass'n v. Rob
891 F.3d 174
| 5th Cir. | 2018Background
- In 2007 Kcevin Rob executed a $113,600 note secured by a Texas home-equity lien; payments ceased in March 2011.
- Multiple notices were sent: notice(s) of default/intent to accelerate in 2011 and 2012, and notices of acceleration in 2011 and 2013.
- Wilmington Trust acquired the loan in 2014 and sent a "NOTICE OF RESCISSION OF ACCELERATION," stating the note and security instrument were reinstated as if no acceleration occurred.
- Wilmington Trust sued the Robs in June 2015 seeking a foreclosure judgment and alleged in its amended complaint that it was accelerating the debt and that the complaint served as notice of acceleration.
- The district court granted Wilmington Trust summary judgment permitting foreclosure; the Robs appealed asserting inadequate pre-acceleration notice after the rescission.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether lender gave proper notice of intent to accelerate before filing suit | Wilmington Trust: prior notices and the amended complaint suffice as notice of acceleration | Robs: rescission of prior acceleration required new, clear notice of intent before re-accelerating | Court: Lender failed to prove clear and unequivocal notice of intent to accelerate after rescission; summary judgment reversed and dismissal rendered |
| Whether a prior rescission of acceleration eliminates prior notice such that re-acceleration requires new notice | Wilmington Trust: the complaint and past notices suffice without new pre-suit notice | Robs: rescission restored original contract status and requires fresh notice of intent to accelerate | Court: Erie guess that Texas Supreme Court would require new notice after rescission; lender’s conduct was inconsistent/inadequate |
Key Cases Cited
- Auguster v. Vermilion Parish Sch. Bd., 249 F.3d 400 (5th Cir. 2001) (standard of review for summary judgment)
- Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562 (Tex. 2001) (effective acceleration requires clear, unequivocal notice of intent and notice of acceleration)
- Boren v. U.S. Nat. Bank Ass’n, 807 F.3d 99 (5th Cir. 2015) (abandonment of acceleration restores contract to original condition)
- Shumway v. Horizon Credit Corp., 801 S.W.2d 890 (Tex. 1991) (borrower may waive notice only by unequivocal waiver)
- Ogden v. Gibraltar Sav. Ass’n, 640 S.W.2d 232 (Tex. 1982) (notice that default "may result" in acceleration is insufficient; notice must be clear and unequivocal)
- Jasper Fed. Sav. & Loan Ass’n v. Reddell, 730 S.W.2d 672 (Tex. 1987) (acceleration notice ineffective unless preceded by proper notice of intent to accelerate)
- Schuhardt Consulting Profit Sharing Plan v. Double Knobs Mountain Ranch, Inc., 468 S.W.3d 557 (Tex. App.—San Antonio 2014) (courts disfavor acceleration as a harsh remedy)