Case Information
*1 United States District Court Southern District of Texas ENTERED June 09, 2017 IN THE UNITED STATES DISTRICT COURT David J. Bradley, Clerk FOR TH E SOUTHERN DISTRICT O F TEU S H OUSTON DIVISION
DEVDARA L.L.c., A TEXAS LIM ITED LIABILIV COMPANY,
Plaintiff,
CA SE NO. 4:16-CV-00140 W ELLS FARGO BANK, N.A.,
D efendant.
O R D E R
Pending before the Court is Defendant's M otion for Sum m ary Judgm ent and Brief in Support. (lnstrument No. 32).
1.
A . Plaintiff Devdara, L.L.C., a Texas Limited Liability Company, Ccplaintiff ') seeks declaratory judgment that the statute of limitations bars Defendant W ells Fargo, N.A. (t'Defendant'') from foreclosing on property located at 2114 Enchanted Park Lane, Katy, Texas 77450 (the ''Property''), because more than four years has passed since the underlying loan was accelerated. Plaintiff also requests that the Court void D efendant's deed of trust and seeks a determination regarding who is entitled to paym ent if the deed of trust is not void. Defendant asserts that the there is no evidence that the underlying loan w as accelerated. ln addition, Defendant posits thatsummary judgment evidence clearly establishes that it unequivocally abandoned any purported acceleration by sending a subsequentnotice of default requesting *2 paym ent on less than the full am ount of the loan and therefore the lim itations to foreclose have not expired and Defendant is entitled to summary judgment.
B. Plaintiff is a Texas lim ited liability com pany. Based on publicly filed records, Nanik Bhagia (ûûBhagia'') is Plaintiff's sole member. (lnstrument No. 1 at 3). Bhagia is a natural person and Texas citizen. 1d. Defendant is a national banking association organized under federal law. Under its articles of association, D efendant's m ain office is located in South D akota. Therefore, Defendant is a citizen of South D akota for diversity purposes. Id at 4.
The Property was originally purchased by husband and w ife, Lem orris G rover and W an Grover (the ''Grovers'').On April 27, 2004, in connection with the purchase of the Property, the Grovers executed a promissory note (11Note'') in the principal amount of $85,495.00 made payable to W orld Savings Bank, FSB (''W orld Savings''). (lnstrument No. 32-1). On that same day, the Grovers executed a deed of trust (the ''Deed of Trust'') that granted a security interest in the Property to secure repayment of the Note (the Note and Deed of Trust, are collectively referred to herein as the ''Grover Loan''). (lnstrument No. 32-2). The Note is due and payable on May l 5, 2034 (the ûtM aturity Date'').(lnstrument No. 32-1 at 2).
On or about D ecem ber 31, 2007, W orld Savings changed its nam e to W achovia Mortgage, FSB (sW achovia''), and on or about November1, 2009, W achovia converted to a national bank and subsequently merged into W ells Fargo Bank, N.A. (lnstrument No. 32 at 2; W ells Fargo is the successor-by-m erger to W orld Savings and Instrum ent No. 32-1 W achovia. 1d.
O n July 18, 2011, Defendant sent correspondence to the G rovers by certified m ail notifying them , am ong other things, that the Grover Loan w as in default for failure to m ake paym ents due and that the M aturity D ate of the Note w ould be accelerated if the default w as not timely cured (the ''July 2011 Notice of Default'l). (Instnzment No. 32-1 at 29).
On October 4, 2011, via a D eed Under içFourth'' W rit of Execution, Plaintiff acquired the Propel'ty at a Constable s ' Sale conducted by the Harris County Constable.l (lnstrument No. 22 at 4', lnstrument No. 32-2 at 2). However, pursuant to the Deed Under itFourth'' W rit of Execution, Plaintiff only received the right, title, interest, and claim that the G rovers had in the Property. (lnstrument No. 32-2 at 3). Therefore, Plaintiff acquired the Property subject to Defendant's lien on the Property. Id ; Tex. Civ. Prac. & Rem. Code. j 34.05 (Vernon 1986).
On October 24, 2011, the Grovers received from Defendant a Notice of Substitute Trustee's Sale (lkNotice of Sa1e'') infonning them that the Property was scheduled for a December 6, 2001 foreclosure sale. (lnstrument No. 19-1). However, the December 6, 2011 scheduled foreclosure sale of the Property was never consummated. (lnstnlment No. 32 at 3; lnstrument No 32-1 at 3).
On January 22, 2015, D efendant sent correspondence to the G rovers by certified m ail notifying them , am ong other things, that the G rover Loan was in default for failure to m ake paym ents due and that the M aturity Date w ould be accelerated if the default w as not tim ely cured (the ''January 2015 Notice of Default'').
ln its A m ended Com plaint, Plaintiff alleges that the loan originally taken out by the Grovers was accelerated as late as November 2011 and possibly earlier. (lnstrument No. 19 at 2). l The Honorable 61St District Court of Harris County , Texas, in Cause No. 2006-59727 issued a tçFourth'' W rit of Execution (tlWrit of Execution'') in favor of Terence and Carolyn McGuinness to recover judgment against Lemorris Grover and Marcelo Sanchez on a certain judgment entered on January 6, 2011. The W rit of Execution com manded the Constable of Precinct 5 of H arris County, Texas, to seize and sell the Property. Plaintiff purchased the Property for $1,500.
Plaintiff notes that the Notice of Sale scheduled a Substitute Trustee's Sale of the Property under the Deed of Trust to be held on December 6, 2011. (lnstrument No. 22 at 4). Plaintiff posits that the Notice of Sale is evidence that the Grover Loan w as in default, and that the Grover Loan had been accelerated as of O ctober 24, 2011. Plaintiff notes that under Texas law , a deed of trust m ust be enforced w ithin four years from the date of m aturity of the note or the deed of tnlst is barred by the statute of limitations and is void. TEX. CIV. PRAC. & REM. CODE j 16.035. Plaintiff reasons that because the Grover Loan w as accelerated as of October 24, 2011, pursuant to j16.035 of the Texas Civil Practice and Rem edies Code, Defendant had until October 24, 2015 to enforce the D eed of Trust. 1d. Plaintiff contends that since the D efendant did not enforce the Deed of Trust by that date the Deed of Trust is void under Texas law . fJ.
In D efendant's M otion for Sum m ary Judgm ent and Brief in Support, Defendant asserts that the statute of limitations found in 516.035 of the Texas Civil Practice and Rem edies Code does not bar Defendant's ability to foreclose on the Property. (lnstrument No. 32 at 1 and 8). First, D efendant contends that Plaintiff has no evidence that the Grover Loan w as ever accelerated. f#. Second, D efendant posits that even if it could be argued that the July 2011 Notice of D efault w as an acceleration under the G rover Loan, it unequivocally abandoned any purported acceleration by sending the January 2015 Notice of Default (well within the four year statute of limitations period) requesting payment on less than the full amount of the Grover Loan. 1d. Therefore, the statute of lim itations to foreclose has not expired and Defendant is entitled to summary judgment dismissing this lawsuit with prejudice. fJ.
C. On January 4, 2016, Plaintiff filed its O riginal Petition, and A pplication for Tem porary Restraining Order in the 129th District Court of Harris County, Texas (ûûl-larris County Court''), *5 styled Devdara, L.L.C. A Texas Limited Liability Company v. W ells Fargo Bank, N.A ., Cause No. 2016-00068. (lnstrument No. 1-5). On January 4, 2016, Plaintiff's Application for Temporary Restraining Order was granted cx parte (the 1çTRO''). (Instrument No. 1-9). The TRO enjoined Defendant from (i) selling the Property and (ii) disrupting or interfering with Plaintiff s occupation of the property. Id at 2 and 3.D efendant w as ordered to appear before the Harris County Court on January 25, 2016, to show cause why a temporary injunction should not be granted pending trial on the m erits of the case. 1d. D efendant filed its Answ er the Original Petition on January 18, 2016. (Instrument No. 1-9). Defendant removed the case to federal court on January 19, 2016. (lnstrument No. 1). On April 4, 2016, Defendant filed its Motion to Dismiss and Brief in Support. (Instrument No. 11). On April 25, 2016, Plaintiff filed its Opposed Response to Motion to Dismiss and Brief in Support. (Instrument No. 12). Defendant filed its Reply in Support of M otion to D ism iss and Brief in Support on M ay 2, 2016. (lnstrument No. 14). On July 1 1, 2016, the Court granted Defendant's M otion to Dismiss and Brief in Support; how ever, Plaintiff w as granted leave to am end its com plaint w ithin 10 days of the Court's Order (Instrument No. 16). On July 21, 2016, Plaintiff filed its Amended Complaint. (Instrument N(). 19). On July 26, 2016, Defendant filed its Motion to Dismiss Amended Complaint and Brief in Support. (Instrument No. 20).On August 15, 2016, Plaintiff filed its Response to Motion to Dismiss Amended Complaint and Brief in Support. (lnstrument No. 22). On August 25, 2016, the Court denied the Defendant's M otion to Dismiss Amended Complaint and Brief in Support. (lnstrument No. 23).On September 16, 2016, Defendant filed its Answer to Amended Complaint. (lnstrument No. 24).On February 21, 2017, Defendant filed its M otion for Summary Judgment and Brief in Support. (Instrument No. 32). Plaintiff did not tile a response to D efendant's M otion for Sum m ary Judgm ent and Brief in Support.
Il. Summary judgment appropriate tsif the pleadings, depositions, answers interrogatories, and adm issions on file, together w ith the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'' Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Warjield v. Byron, 436 F.3d 551, 557 (5th Cir. 2006). The ûsmovant bears the burden of identifying those portions of the record it believes dem onstrate the absence of a genuine issue of m aterial fact.'' Triple Tee Golf Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-2541986)). t1A fact is ûmaterial' if its resolution in favor of one party might affect the outcome of the lawsuit under govenzing lam '' Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir. 2009). An issue is tûgenuine'' if the evidence is sufticient for a reasonable jury to return a verdict for the nonmoving party. SeeAnderson v. Libert.v Lobby, Inc., 477 U.S. 242, 248 (1986).
lf the burden of proof at trial lies w ith the nonm oving party, the m ovant m ay satisfy its initial burden by çishow ing that is, pointing out to the district court that there is an absence of evidence to support the nonm oving party's case.'' Celotex, 477 U .S. at 325. W hile the party moving for summary judgment must demonstrate the absence of a genuine issue of material fact, it does not need to negate the elements of the nonmovant's case. Boudreaux v. Swtjt Transp. Co., 402 F.3d 536, 540 (5th Cir. 2005) (citation omitted). ûtlf the moving party fails to meet gitsl initial burden, the m o , tion (for summary judgment) must be denied, regardless of the nonmovant's response.'' United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th Cir. 2008) (quoting Little p. LiquidAir Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en bancl).
After the moving party has met its burden, in order to ûçavoid a summary judgment, the nonm oving party m ust adduce adm issible evidence w hich creates a fact issue concerning the existence of every essential com ponent of that party's case.'' Thom as v. Price, 975 F.2d 231, 235 (5th Cir. 1992). The party opposing summary judgment cannot merely rely on the contentions contained in the pleadings. Little, 37 F.3d at 1075. R ather, the tûparty opposing sum m ary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his or her claim,'' Ragas v. Tennessee Gas Plpeline Co., 136 F.3d 457, 458 (5th Cir. 1998); Baranowski v. Hart, 486 F.3d 112, 119 (5th Cir. 2007). Although the court draw s a11 reasonable inferences in the light m ost favorable to the nonm oving party, Connors v. Graves, 538 F.3d 373, 376 (5th Cir. 2008), the nonmovant's ttburden will not be satisfied by som e m etaphysical doubt as to the m aterial facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence.'' Boudreaux, 402 F.3d at 540 (qltoting Little, 37 F.3d at 1075). Similarly, lûunsupported allegations or aftidavit or deposition testim ony setting forth ultim ate or conclusory facts and conclusions of law are insufficient to defeat a motion for summary judgment.'' Clark v. Am 's Favorite Chicken, 110 F.3d 295, 297 (5th Cir. 1997).
In deciding a summary judgment motion, the district court does not make credibility determinations or weigh evidence. Chevron Phillips, 570 F.3d 606, 612 n.3 (5th Cir. 2009). Nor does the court ûûsift through the record in search of evidence to support a party's opposition to summary judgment.'' Jackson v. Cal-Western Packaging Corp., 602 F.3d 374, 379-80 (5th Cir.
/ 2010); Malacara w. Garber, 353 F.3d 393, 405 (5th Cir. 2003); Ragas, 136 F.3d at 458; Nissho- Iwai American Corp. v. Kline, 845 F.2d 1300, 1307 (5th Cir.1988) (it is not necessary tûthat the entire record in the case ... be searched and found bereft of a genuine issue of m aterial fact before *8 summary judgment may be properly entered''). Therefore, (tgwlhen evidence exists in the summary judgment record but the nonmovant failseven to refer to it in the response to the motion for summary judgment, that evidence is not properly before the district court.'' Malacara, 353 F.3d at 405.
111.
A . ûtW hen a m ortgage or deed of trust containing a pow er of sale creates a lien on real property, Texas 1aw requires that the lender foreclose no later than four years after the day the cause of action accruesa'' Wheeler v. U.S. Bank Nat'l Ass'n,, 2016 W L 554846, at *4 (S.D. Tex. Feb. 10, 2016) (citing Tex. Civ. Prac. & Rem. Code j 16.035; Holy Cross Church of God in Christ v. Wolh 44 S.W .3d 562, 567 (Tex. 2001$. çlonce the four-year limitations period expires, the real-property lien and the power of sale to enforce the lien becom e void.'' W heeler, 2016 W L 554846, at *4 (citing Holy Cross Church of God in Christ, 44 S.W .3d at 567 (citing Tex. Civ. Prac. & Rem. Code j 16.035(d)).
Here, Plaintiff argues that the O ctober 24, 2011 N otice of Substitute Tnlstee's Sale (isNotice of Sale'') sent to the Grovers informing them that the Property was scheduled for a D ecem ber 6, 2011 foreclosure sale is evidence that the Grover Loan w as accelerated on O ctober
# 24, 2011. (Instrument No. 19). Plaintiff reasons that if the Grover Loan was accelerated as of October 24, 2011, then under Texas law , Defendant had until October 24, 2015, in order to enforce the Deed of Trust or the D eed of Trust w ould becom e void. TEx. Clv. PRAC. & REM . CODE j 16.035(d). However, nowhere in the Notice of Sale does it inform the Grovers that the Grover Loan had been accelerated. (lnstrument No.19-1 at 2). Effective acceleration requires (i) clear notice of intent to accelerate and (ii) notice of acceleration and both must be clear and *9 unequivocal. Holy Cross Church of God in Christ v. Wolh 44 S.W .3d. 562, 566 (Tex. 2001). Here, Plaintiff offers no evidence that Defendant intended to accelerate the Grover Loan by the Notice Of Sale. In addition, the scheduled Decem ber 6, 2011 foreclosure sale of the Property was never consummated. (Instrument No. 32 at 3).
In its A m ended Com plaint, Plaintiff further speculates that prior to the Notice of Sale, the Deed of Trust was accelerated in iQ0l 1 and possible earlier''. (lnstrument No. 19 at 2). On July 18, 2011, D efendant sent the July 2011 Notice of D efault to the G rovers notifying them , am ong other things, that the Grover Loan w as in default for failure to m ake paym ents due and that the Maturity Date of the Note would be accelerated if the default was not timely cured. (Instrument No. 32-1 at 29). Based on the July 2011 Notice of Default, the earliest that the Grover Loan could have been accelerated would have been August 2011 (the diAugust 2011 Acceleration''). See id (stating that the Grovers had until August 17, 2011 to cure the default or else the Grover Loan would be accelerated). Assuming arguendo that the Grover Loan was accelerated, Defendant abandoned the A ugust 2011 A cceleration by its subsequent action of sending the Grovers the January 2015 N otice of D efault requesting paym ent on less than the full am ount of the Grover Loan and advising them that the M aturity D ate of the N ote w ould be accelerated if the default was not cured. (lnstrument No. 32-1 at 32).
The Fifth Circuit and district courts w ith in the Fifth Circuit, including the Southern District of Texas, have held that a lender m ay abandon acceleration by sending new statem ents or notices of default seeking less than full paym ent of the accelerated debt. See, e.g., M artin v. FCJ. Nat. Mortgage Ass'n, No. 15-41104, 2016 W L 723263, at *2 (5th Cir. Feb. 22, 2016) (holding that lethe requestfor payment of less than the full obligation following an initial acceleration of the entire obligation amounted to waiver or abandonment of the acceleration.''l; *10 M eachum v. Bank of New York M ellon Frlfy/ Co. N.A., No. 3:13-CV-2322-N, 2015 W L 765982, at * 1-2 (N.D. Tex. Feb. 20, 2015) affd, No. 15-10237, 2016 W L 121384 (5th Cir. Jan. 11, 2016) (Iender abandoned acceleration by sending subsequent notice of default and intent to accelerate requesting an amount less than the full amount of note as due); Leonard, 616 F. App'x at 680 (lender waives or abandons an earlier acceleration ''by requesting payment on less than the full amount of the loan.''); Boren p. U.S. Nat. Bank Ass'n, 807 F.3d 99, 106 (5th Cir. 2015) (second notice of default ûiunequivocally manifested an intent to abandon the previous acceleration. ...''). O nce acceleration is abandoned, the noteholder no longer m ust foreclose within four years from the date of acceleration, the statute of lim itations to foreclose resets, and the loan is restored to its original m aturity date. W heeler v. U.S. BankN at'lAss'n,, 2016 W L 554846, at *5.
As a m atter of law , D efendant's subsequent action of sending the January 2015 N otice of D efault requesting paym ent on less than the full am ount of the G rover Loan establishes that the purported A ugust 2011 A cceleration w as abandoned w ell w ithin the four year statute of lim itations. Because the purported A ugust 2011 A cceleration w as unequivocally abandoned, the statute of limitations to foreclose did not lapse, and Defendant is entitled to summary judpnent dismiss Plaintiff s declaratory judgment claim .
Since Plaintiff can offer no evidence that the G rover Loan w as accelerated in 2011 or earlier, Defendant still holds a valid lien on the Property and therefore is entitled to sum m ary ' udgm ent. J
Accordingly, D efendant's M otion for Sum m ary Judgm ent and Brief in Support is GRANTED .
lV.
10 *11 Based on the foregoing analysis, Defendant's M otion for Sum m ary Judgm ent and Brief in Support is GRANTED (lnstrument No. 32).
The Clerk shall enter this Order and provide a copy to a11 parties.
SIG N ED on this the day of June, 2017.
VANESSA D. GILM ORE UNITED STATES DISTRICT JUDGE