### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-14-00658- CV

Robyn N. Jones, App ellant

v. Wells F argo Bank, N.A., App ellee

F ROM TH E DISTRI CT COURT O F H AY S CO UNTY, 428 TH JUDICI AL DISTRICT NO. 11- 0479 , H ONO RAB LE R. B RUCE B OY ER, JUDGE P RESIDING

M E M O R A N D U M O P I N I O N Roby n N. J ones appea ls t h e trial court’s partial summary judgme nt in favor of W el l s Fa rg o Ba nk, N.A., on her claim seeking a decla ration that she is a principal o b l i go r o n a

m o rt g ag e note issued by the bank to her ex-husband and “assig ned” to her by her ex-husban d pursuant to a divorce decr ee. J o n es contends that the trial court err ed in g ranting Wells Fa rg o’s partial summ ary -judg ment motion and denying hers because she was entitled to a dec lara tion as a

m at t er o f l aw that she beca me a borrowe r under the note as a result of the assig nment and her assumption of the debt. She also contends that fede ral law prohibits Wells Fa rg o from ref

using to consent to her assumption of the debt. We will aff irm the trial court’s final judgme nt dismiss ing all of Jones’s claims. 1

After the trial court g rante d Wells Fa rg o’s motion for partial summary judgme nt on J ones’s 1 decla rat o ry -j udg ment claim, the parties agree d that J ones would dismiss with prejudice herDISCUSSIO N 2 Whil e the g ener al rule in Texas is that all contra cts are fre ely assig nable, Crim Truck & Tractor Co . v. N

a vis tar Int’l Transp. Corp. , 823 S.W .2d 591, 596 (Tex. 1992), there is an important exception to this rule for contra cts providing cre dit to a debtor. See I n re FH Partners, L.L.C

. , 335 S.W .3d 751, 761 (Tex. App.—Austin 2011, orig

. proce eding ) (“Te x as co urts have long held that a debtor cannot assig n an extension of cr edit or deleg ate its duty to pay a cre ditor without the cre ditor’s consent.” ). This longsta nding rule “re flec ts a view that a cre ditor’s ag ree ment to extend cre dit inhere ntly contemplates a specific debtor and that the cre ditor should not b e eff ectively forc ed to extend cre dit to a differ ent debtor without the cr editor’s c onsent.” Id. (citing Menge r v. W

ard , 87 Tex. 622, 626 (1895)) ; Lancaster v. Gree r , 572 S.W .2d 787, 7 90 (Tex. Civ. App.—Tyler 1978, writ ref ’d n.r.e.) (“The rationale

. . . is that c redit contra cts by their ver y nature involve a relationship betwee n the s eller a nd buy er of

persona l confide nce and t rust, such t hat t he seller [who extends credit] musthave intended the rig hts c onfer red by the contra ct to be exercised only by him in whom he actually confide d.”). A g rante e’s assumption of a note from the orig inal borrowe r does not bind the lender unless the lend er co n s en ts to the assumption of the note or takes action to rec og nize the gra ntee as the prim ary debtor. See L a -R ey, In c. v. Kowals ki , 433 S.W .2d 530, 533 (Tex. Civ. Ap p . — S an Antonio 1968, no writ) (conc luding that “Kowa lski rema ined primarily liable to the

rema ining claims, and the trial court rende red an Ag ree d Orde r of Dismissal, which finally disposed of all matters be tween the parties. Be cause the parties ar e fa m i l i ar with the fac ts, proce dural background, and applicable 2 standard of revie w, we dispense with a rec itation of those here exc ep t as nece ssary to explain the rea sons for our de cision. SeeTex. R. App. P . 47.4. 2Ba

nk, since it did not consent to the assumption of the note or take any o ther action to rec og nize appellant as the primary debtor” ); Magnolia Petroleum Co. v. Havoline Auto Supply Co. , 172 S.W

. 759, 761 (Tex. Ci v . Ap p . — Dallas 1914, no writ) (noting t hat although party “wa s willing to g ive

cre dit to [t he debtor], it does not follow that he was willing to g ive cre dit to [t he debtor’s assig nee]

. . . [and] could not be forc ed to do so by mere assig nment of the contra ct”) ; see also Straus

v. Brooks , 148 S.W .2d 393, 396 (Tex. 1941) (holding that assumption of contra ct as consideration for purcha se of proper

ty become s contra ct under which one making assumption become s principal obligor only “whe n acc epted by the pay ee of the obligation assumed, or the mortg ag ee” ); Moore

v. Mohon , 514 S.W .2d 508, 5 1 3 (T ex . C iv. App.—Waco 1974, no writ) (holding that wife of dece ased purcha ser was not entitled to specific enfor ceme nt of contra ct involving extension of cre dit to de cea sed purcha ser for land purcha se beca use contra cts providing for cre dit betwee n parties are not assig nable)

. Be cause there is no summary -judg ment evidenc e demonstrating that Wells Fa rg o consente d to the “assig nment” or assumption of the no t e b y J o n es, the trial court did not err in g ranting Wells Fa

rg o’s motion for partial summary judgme nt on her claim seeking a decla ration that she is a princ ipal obligor

on the note. Notwithstanding this well-settled exception to the assig nment of contract s and Wells Fa rg o’s failure to consent to her assumption, J ones contends that beca use the note rec ited that the term “borr ower ” means “ea ch person signing at the end of this Note, and the person’ s succe ssors and assig ns,” it nece ssarily follows that the note was fre ely assig nable and did n o t require Wells Fa rg o’s consent for her to assume the debt and become a principal obligor

. We disag ree . The languag e defining the term “borr ower ” does not expli citly authorize assig nment, and absent such

3expli cit authorization, we will follow the longsta nding rule in Texas requiring a lender ’s consent befor e it is bound by a third-par ty ’s assumption of a debtor’s debt. See Lancaster v. Gree r , 572 S.W .2d 787, 789 (Tex. Civ. App.—Tyler 1978, writ ref ’d n . r.e.) (noting that wher e ear nest money contra ct neither expli citly authorized nor prohibited assig nment, g ener al rule that contra cts extending cre dit are not assig nable absent cre ditor’s consent g overns)

. Even if J ones’s assumption of her ex-husband’s debt in consideration of his convey ance o f t h e p roperty constituted a leg al “assig nment” of his rig hts under the note as betwee n the two of them, u n d er T ex as law it does not bind W ells Fa

rg o to that “ assig nment” abse nt its consent. See I n re FH Partners , 335 S.W .3d at 761. Jones also claims that the trial court err ed in g ranting Wells Fa rg o summary

judgme nt beca use the Gar

n-St. Ger main Depository Institut ions Act of 1982 (the Act) pree mpts Wells Fa rg o’s rig ht under state law t o re fu s e t o accept or consent to her assumption of the note. See 12 U.S.C. § 1701j-3(d)( 7) (prohibiting lender from exercising “due- on-sale” (ac cele ration of debt) rig ht “upon

. . . a transf

er resulti ng from a decr ee of dissoluti on of marria g e . . . by which the spouse of the borrowe r become s an owner of the proper ty ”). Howeve r, the provision c ited by J ones restric ts the lender ’s rig ht to acc eler ate the debt; it does not restric t the lender ’s rig ht to reje ct an assumption of the debt. See id. ; see also W ilson v. Bank of

Am., N.A. , 48 F. Supp. 3d 787, 796–97 (E.D. Pa. 2014) (dee m i n g Ac t t o be “irre levant” as to whether transfe ree of rea l proper ty has assumed mortg ag e pursuant to lender ’s cre dit standards)

. Fur thermore , the provision prohibits the acc eler ation of a debt “upon” the specifie d transfe rs; here , Wells Fa rg o did not acc eler ate the loan upon the parties’ divorce and transfe r of the proper t y t o J ones but, rathe r, sever al y ear s later upon defa ult by non-pay

ment.

4See Smith v. Gree n Tree Servic ing, LLC , No. C13-1573RSL , 2014 WL 1319821, at *2 (W.D. Wash.

Mar. 28, 2014) (holding that Act did not apply when borrowe r’s spouse obtained proper ty throug h divorce and five y ear s later defa ulted by non-pay

ment). We hold that the Act does not entitle J ones to the relief

she see ks in this l awsuit or pre empt Texas state law unde r these c ircumstance s.

CONCLUSION We affir m the trial court’ s final judg ment dismiss ing a ll of J ones’s c laims.

__________________________________________ David Pury ear , J ustice Be fore J ustices Pury ear , Pemberton, and B ourland Affir med Filed: Jul y

22, 2016

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