REVERSE and REMAND in part; AFFIRMED in part; and Opinion Filed June 24, 2019 

S 

In The 

Court of Appeals 

Fifth District of Texas at Dallas 

No. 05-17-01484-CV 

PNC MORTGAGE, A DIVISION OF PNC BANK, N.A. SUCCESSOR TO NATIONAL 

CITY BANK, AND NATIONAL CITY MORTGAGE, A DIVISION OF NATIONAL 

CITY BANK OF INDIANA, Appellants 

V. 

JOHN HOWARD AND AMY HOWARD, Appellees 

On Appeal from the 199th Judicial District Court 

Collin County, Texas 

Trial Court Cause No. 199-01559-2010 

MEMORANDUM OPINION 

Before Justices Whitehill, Molberg, and Reichek 

Opinion by Justice Reichek 

In this suit concerning the default on a note and foreclosure sale of a private home, PNC 

Mortgage, a division of PNC Bank, N.A. successor to National City Bank (“PNC”), and National 

City Mortgage, a division of National City Bank of Indiana (“Bank of Indiana”), appeal a partial 

summary judgment in favor of John and Amy Howard on their claims against Bank of Indiana. 

PNC also appeals the final judgment following a bench trial on stipulated facts ordering that it take 

nothing by its claims against the Howards. In four issues, the banks generally contend the trial 

court erred in its application of the law to the undisputed summary judgment evidence and 

stipulated facts and in failing to file findings of fact and conclusions of law. For the reasons that 
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follow, we affirm the trial court’s judgment in part, reverse and render in part, and remand for 

further proceedings consistent with this opinion. 

Factual and Procedural Background

 The undisputed facts relevant to our resolution of this appeal are as follows. In March 

2003, the Howards purchased a home in Frisco, Texas and obtained two purchase money lien 

mortgages from First Franklin Financial Corporation. On March 24, 2005, the Howards entered 

into a loan refinance transaction with Bank of Indiana. In connection with the refinancing, the 

Howards executed a note and deed of trust on the property in favor of Bank of Indiana. The 

Howards then used the loan proceeds they obtained from Bank of Indiana to pay off the mortgage 

debts they owed to First Franklin. 

 On March 4, 2008, Bank of Indiana assigned the note and deed of trust to National City 

Mortgage Co., a subsidiary of National City Bank located in Ohio (National City Bank). The 

assignment was recorded in the Collin County Records. 

 The Howards stopped making payments on the note after November 1, 2008 and defaulted 

under the note’s terms. On January 20, 2009, National City Bank sent notices of default and intent 

to accelerate to both John and Amy Howard. On that date, National City Bank was the servicer 

and holder of the note and deed of trust. On June 19, 2009, National City Bank, as servicer and 

holder of the note and deed of trust, sent the Howards notices of acceleration through its attorneys. 

On the same day that National City Bank accelerated the note, Bank of Indiana, which had 

previously assigned the note and deed of trust to National City Bank, appointed Greg Bertrand as 

a substitute trustee to conduct a foreclosure sale of the Howard’s property. 

In November 2009, National City Bank was merged into PNC and PNC became the 

servicer of the Howard’s note. Four months later, in March 2010, Bank of Indiana, through its 

attorneys, sent a notice of acceleration to Amy Howard. The notice listed Bank of Indiana as the 
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mortgagee and PNC as the mortgage servicer. On April 6, 2010, Bertrand sold the Howard’s 

property at a nonjudicial foreclosure sale on behalf of Bank of Indiana. According to the substitute 

trustee’s deed, the property was sold on behalf of, and also purchased by, Bank of Indiana. 

 Ten days later, the Howards filed this suit against Bank of Indiana and PNC seeking to set 

aside the foreclosure sale and resulting substitute trustee’s deed. In their petition, the Howards 

asserted the foreclosure was void because Bank of Indiana was not the mortgagee at the time it 

appointed the substitute trustee and held no interest in the deed of trust at the time the property 

was sold on its behalf. 

 Almost four years later, in February 2014, the Howards filed a motion for partial traditional 

summary judgment against Bank of Indiana. In the motion, the Howards argued the foreclosure 

sale was void because the sale was both noticed by and conducted on behalf of Bank of Indiana, 

which had assigned its interest in the note and deed of trust to another bank prior to the foreclosure. 

The Howards further contended the foreclosure by Bank of Indiana violated the terms of the deed 

of trust which stated that a substitute trustee could only be appointed by the lender and, at the time 

the substitute trustee was appointed, the lender was National City Bank, not Bank of Indiana. In 

support of their motion, the Howards submitted documents including the note, the deed of trust, 

the assignment of the deed of trust from Bank of Indiana to National City Bank, the substitute 

trustee appointment signed by a representative of Bank of Indiana, and the notice of substitute 

trustee sale and the substitute trustee’s deed listing Bank of Indiana as the mortgagee. 

 Although the motion was directed solely at Bank of Indiana, both PNC and Bank of Indiana 

filed a response arguing the Howards had asserted “a cause of action without recognition in Texas” 

and they were attempting to sidestep the elements of a wrongful foreclosure claim under section 

51.002 of the Texas Property Code. The banks further construed the Howards’ motion as 

challenging the validity of the chain of assignments of the note and deed of trust and contended 
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the Howards failed to produce any evidence that would allow the trial court to declare that 

“Defendants were neither the holder nor the owner of the loan.” Neither PNC nor Bank of Indiana 

submitted any summary judgment evidence in support of their response. 

In their reply to the banks’ response, the Howards noted that their motion was not directed 

at PNC or any interest it might have in the loan. The motion was directed solely at Bank of Indiana 

because that was the entity that foreclosed on their property after assigning away its rights in the 

note and deed of trust. Following a hearing, the trial court granted the Howards’ motion and 

rendered judgment declaring the foreclosure sale void ab initio. 

On January 8, 2015, PNC and Bank of Indiana filed an amended answer and, for the first 

time, asserted counterclaims against the Howards seeking relief including a declaratory judgment 

for contractual and equitable subrogation and foreclosure of the equitable lien. Four months later, 

in May 2015, PNC filed a separate lawsuit against the Howards seeking damages for their failure 

to perform their obligations under the note. The Howards answered and asserted the affirmative 

defense of limitations. The suit on the note was consolidated into this cause in October 2016. 

 On April 3, 2017, the parties filed a joint motion for judgment on an agreed statement of 

facts, but reserved the right to introduce additional evidence at trial. A bench trial was conducted 

on April 5, at which the Howards rested on the stipulated facts. PNC and Bank of Indiana called 

both John and Amy Howard as witnesses and elicited testimony concerning amounts owed on the 

note, the refinancing of the loan in 2005, notices sent to the Howards, and Amy Howard’s 

bankruptcy. Based on the evidence presented, the trial court rendered judgment that PNC and 

Bank of Indiana take nothing by their claims against the Howards and ordered that the note and 

lien on the Howards’ property were void and unenforceable. The judgment further incorporated 

the partial summary judgment rendered in favor of the Howards and awarded the Howards $75,000 
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in attorney’s fees. All other relief requested in the case was denied. PNC and Bank of Indiana 

then brought this appeal. 

Analysis

I. Summary Judgment on the Foreclosure

 In their second issue, PNC and Bank of Indiana contend the trial court erred in granting the 

Howards’ motion for partial summary judgment. We review the grant of a summary judgment de 

novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); Spicer v. Tex. Workforce 

Comm’n, 430 S.W.3d 526, 532 (Tex. App.—Dallas 2014, no pet.). A movant for traditional 

summary judgment has the burden of showing there is no genuine issue of material fact and it is 

entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 

690 S.W.2d 546, 548–49 (Tex. 1985); Spicer, 430 S.W.3d at 532; McCoy v. Texas Instruments, 

Inc., 183 S.W.3d 548, 553 (Tex. App.––Dallas 2006, no pet.). We consider the summary judgment 

evidence in the light most favorable to the non-movant. Mann Frankfort Stein & Lipp Advisors, 

Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009); Spicer, 430 S.W.3d at 532. When a plaintiff 

establishes his right to summary judgment as a matter of law, the burden then shifts to the 

defendant as non-movant to present evidence that raises a genuine issue of material fact, thereby 

precluding summary judgment. Boudreau v. Fed. Tr. Bank, 115 S.W.3d 740, 743 (Tex. App.—

Dallas 2003, pet. denied). 

The trial court in this case granted summary judgment against Bank of Indiana and declared 

the foreclosure on the Howards’ property void ab initio. One of the grounds asserted in the 

summary judgment motion was that Bank of Indiana had no authority to appoint a substitute trustee 

and foreclose on the property because it transferred all beneficial interest in the note and deed of 

trust to National City Bank before it instituted foreclosure proceedings. This assignment was 

recorded in the Collin County Records. Pursuant to Texas law, a nonjudicial foreclosure may be 
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initiated by the current mortgagee. Santiago v. BAC Home Loans Servicing, L.P., 20 F. Supp. 3d 

585, 589 (W.D. Tex. 2014). If the security interest has been assigned of record, the current 

mortgagee is the last person to whom the security interest has been assigned of record. TEX. PROP.

CODE ANN. § 51.0001(4)(C). The Howards provided summary judgment evidence that Bank of 

Indiana assigned its security interest in the Howard property to National City Bank before the 

Howards defaulted on the note. The summary judgment evidence also showed that, at the time the 

note was accelerated, National City Bank was the mortgagee. The evidence showed, therefore, 

that Bank of Indiana was not the current mortgagee and could not initiate foreclosure proceedings. 

See Santiago, 20 F. Supp. 3d at 589. 

Because it was not the mortgagee, Bank of Indiana also had no authority to appoint a 

substitute trustee to conduct the foreclosure. This Court addressed a similar situation in Burnett v. 

Manufacturers Hanover Trust Co., 593 S.W.2d 755 (Tex. App.—Dallas 1979, writ ref’d n.r.e.). 

In Burnett, the original mortgagee on a loan for real property appointed a substitute trustee to 

foreclose on the property after it had assigned the note to another entity. Id. at 756. The deed of 

trust required the appointment of the substitute trustee to be made by the holder of the note. Id. at 

757. Because the original mortgagee was no longer the holder of the note, we concluded its 

appointment of the substitute trustee violated the terms of the deed of trust. Id. at 758. A 

foreclosure sale that is not conducted within the authority conferred by the deed of trust is void. 

See id. at 757. 

In this case, the deed of trust stated that a substitute trustee may be appointed by the 

“Lender.” The summary judgment evidence showed that, at the time of the foreclosure, National 

City Bank was the current lender. Under the terms of the deed of trust, therefore, Bank of Indiana 

had no authority to appoint the substitute trustee. We conclude the Howards met their burden to 
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show their entitlement to summary judgment as a matter of law. The burden then shifted to the 

Bank of Indiana to present evidence sufficient to raise a genuine issue of material fact. 

As noted above, PNC and Bank of Indiana filed a joint response to the Howards’ motion, 

but submitted no evidence in support. Instead, the banks argued the Howards failed to provide 

proof that a wrongful foreclosure occurred under section 51.002 of the Texas Property Code.1

 The 

banks further asserted the Howards had no standing to challenge the assignment of the note and 

deed of trust. But, as the banks now concede, the Howards’ claim that Bank of Indiana had no 

authority to foreclose on their property was not a claim for wrongful foreclosure under section 

51.002 of the property code. And the Howards relied upon, rather than challenged, the assignment 

of the note and deed of trust to support their right of recovery. 

 On appeal, the banks now assert for the first time that PNC simply misidentified itself 

as Bank of Indiana in the foreclosure proceedings and the trial court “failed to appreciate that . . . 

Bank of Indiana, National City Bank, and PNC were all merged with and into each other.” On 

that basis, the banks contend the trial court erred in determining in its summary judgment ruling 

that PNC, as the successor bank, lacked authority to foreclose on the Howards’ property. This 

argument is misdirected because the trial court made no such determination. The trial court 

determined only that Bank of Indiana lacked authority in April 2010 to appoint a substitute trustee

and foreclose on the property because Bank of Indiana had no right, title, or interest in the note or 

deed of trust at that time. The banks do not challenge this finding. 

To the extent the trial court “failed to appreciate” that Bank of Indiana merged into National 

City Bank, and then PNC, this is because the banks never submitted any evidence or made any 

arguments regarding an alleged merger or a purported “misidentification,” as a reason to deny the 

 1

 Section 51.002 governs the manner in which foreclosure sales are conducted and sets forth requirements 

concerning, among other things, notices and when and where the sale must occur. TEX. PROP. CODE ANN. § 51.002. 
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Howards’ motion for summary judgment. We note that PNC and Bank of Indiana have been listed 

and treated as separate parties, not merged entities, throughout the proceedings in this case. We 

cannot reverse a summary judgment on a ground not raised below. Pinnacle Anesthesia 

Consultants, P.A. v. St. Paul Mercury Ins. Co., 359 S.W.3d 389, 398 (Tex. App.—Dallas 2012, 

pet. denied); Shih v. Tamisea, 306 S.W.3d 939, 944 (Tex. App.—Dallas 2010, no pet.) (except to 

attack legal sufficiency of movant’s grounds, non-movant must expressly present to trial court any 

reason for avoiding movant’s entitlement to summary judgment). 

The banks point to one reference to the mergers in the summary judgment proceedings to 

argue that the issue was sufficiently raised in the trial court. This reference is in a footnote on the 

first page of a motion for summary judgment the banks filed nearly a year after the Howards filed 

their motion. There are several reasons why this footnote did not sufficiently raise the merger and 

misidentification issues to either defeat the Howard’s motion for summary judgment or preserve 

these issues for review on appeal. 

First, although the trial court conducted hearings on both motions for summary judgment 

before granting the Howards’ motion, the trial court’s order states it considered only the Howards’ 

motion in making its ruling. The record does not reveal any ruling on the banks’ motion. 

Even if the trial court considered the banks’ motion for summary judgment before granting 

the Howards’ motion, the footnote outlining the mergers was for identification purposes only and 

bore no relevance to the grounds asserted by the banks for summary judgment. The banks made 

no argument regarding an alleged misidentification in the foreclosure documents or the effect of 

the alleged merger of Bank of Indiana with National City Bank and PNC on the Howards’ claim 

against Bank of Indiana. Indeed, the banks make no argument even on appeal regarding the effect 

of the alleged misidentification other than to assert it occurred. 
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Next, the banks did not submit any summary judgment evidence in support of their merger 

assertions. Mere assertions are insufficient to create a fact issue precluding summary judgment. 

Boudreau, 155 S.W.3d at 743. Although the banks suggest the trial court could have taken judicial 

notice of the mergers, they never requested it do so. Nor did they present any arguments that might 

have prompted the trial court to do so sua sponte. 

Finally, the footnote on which the banks rely does not state when any of the mergers took 

place. Accordingly, the trial court was not provided with any information in the summary 

judgment proceedings from which it could have concluded that Bank of Indiana merged with 

National City Bank and/or PNC before it commenced foreclosure proceedings on the Howards’ 

property. In other words, there is nothing in the footnote to suggest the mergers occurred during 

a time period that would impact the Howards’ claim that Bank of Indiana had no interest in the 

note and deed of trust at the time it foreclosed. 

 As a separate basis to reverse the summary judgment, the banks argue the summary 

judgment evidence shows that PNC “adequately designated” a substitute trustee under the terms 

of the deed of trust by having the trustee’s law firm send a notice of acceleration to Amy Howard 

in March 2010. As with the banks’ arguments concerning the alleged mergers and 

misidentification, this reason to deny the Howards’ motion for summary judgment was never 

presented to the trial court. Even if we consider the argument as a challenge to the legal sufficiency 

of the Howards’ grounds for summary judgment, and even if we consider the March 2010 notice 

of acceleration to be an effective appointment of a substitute trustee, PNC does not address the 

fact that the acceleration notice states PNC was acting in its capacity as mortgage servicer for Bank 

of Indiana, not as the lender, in authorizing the substitute trustee to foreclose. In fact, PNC later 

stipulated at trial that the March 2010 notice of acceleration was sent by Bank of Indiana, not PNC. 

Accordingly, this notice does not raise a genuine issue of material fact as to the Howards’ claim 
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that Bank of Indiana appointed the substitute trustee in violation of the terms of the deed of trust. 

See Burnett, 593 S.W.2d at 758. 

 In their last challenge to the summary judgment, the banks contend the Howards failed to 

prove the elements of “wrongful foreclosure” as a matter of law because they did not show any 

irregularity in the sale process or that the sale resulted in an inadequate sales price. In a footnote 

to their brief, the banks acknowledge that the Howards’ claim alleging the foreclosure sale was 

conducted without authority is different than a claim alleging wrongful foreclosure based on 

irregularities occurring within the sale. The banks go on to assert, however, without argument or 

authority, that PNC’s misidentification of itself as Bank of Indiana in the foreclosure documents 

was an irregularity in the sale proceeding requiring the Howards to show an inadequate sale price. 

The failure to specifically argue and analyze one’s position or provide authorities waives any error 

on appeal. In re B.A.B., 124 S.W.3d 417, 420 (Tex. App.—Dallas 2004, no pet.). And again, PNC 

never argued or presented any evidence in the summary judgment proceedings below to show that 

the foreclosure conducted on behalf of Bank of Indiana was the result of a misidentification. We 

conclude the banks failed to raise a genuine issue of material fact to defeat the Howards’ motion 

for summary judgment and the trial court properly declared the foreclosure sale by Bank of Indiana 

void. We resolve the banks’ second issue against them. 

II. Equitable Subrogation 

 In their third issue, the banks contend the trial court erred in failing to grant judgment in 

favor of PNC following the bench trial on its claim for equitable subrogation because PNC’s right 

to subrogation was established by the stipulated evidence. According to the banks, to the extent 

the Howards used the proceeds of the loan they obtained from Bank of Indiana to pay off their 

mortgage debt with First Franklin in the 2005 refinancing transaction, the banks became 

subrogated to First Franklin’s rights and assumed their lien position. The banks argue, therefore, 
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that PNC now has a valid equitable lien on the Howard’s property and it should be allowed to 

foreclose this lien. 

PNC is asserting an equitable lien, rather than seeking to foreclose the lien created by the 

deed of trust executed as part of the loan refinancing transaction, because, as counsel for the banks 

stated at trial, they “admittedly have a limitations problem.” The banks stipulated before trial that 

National City Bank, as the holder of the note and deed of trust at the time the Howards defaulted, 

properly accelerated the note on June 19, 2009. Once a note is accelerated, the cause of action for 

foreclosure of the deed of trust lien securing the note accrues and the sale of the property must 

occur within four years. TEX. CIV. PRAC. & REM. CODE ANN. § 16.035(b); Holy Cross Church of 

God in Christ v. Wolf, 44 S.W.3d 562, 574 (Tex. 2001). When the four-year period expires, the 

real-property lien, and the power of sale to enforce the lien, become void. See Wolf, 44 S.W.3d at 

567. 

The acceleration by National City Bank was effective as to PNC as the subsequent holder 

of the note and deed of trust. Id. It is undisputed that PNC asserted no lien claims against the 

Howards until January 2015, more than five years after the note was accelerated. The banks 

contend this limitations issue does not affect PNC’s equitable lien claim because a subrogation 

cause of action does not accrue until the maturity date of the underlying debt that was paid off in 

the refinancing.2

 See Gillespie v. Ocwen Loan Servicing, LLC, No. 4:14-cv-00279, 2015 WL 

12582796, at *4 (S.D. Tex. Oct. 28, 2015). 

A party asserting a claim for equitable subrogation bears the burden of establishing 

entitlement to it. Murray v. Cadle, 257 S.W.3d 291, 300 (Tex. App.—Dallas 2008, pet. denied). 

When determining whether a party is entitled to equitable subrogation, the trial court must balance 

 2

 The banks do not specify the maturity date of the underlying debt, nor point us to anywhere in the record where 

such date could be determined. Nevertheless, we will assume for purposes of this discussion that the banks filed their 

equitable lien claims within the limitations period. 
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the equities in view of the totality of the circumstances. Id. The trial court has discretion in 

deciding cases involving equitable relief, and we will not disturb the trial court’s balancing unless 

it is shown it would be inequitable to do so. Id. The Howards argued at trial, and contend again 

on appeal, that PNC is not entitled to an equitable lien because its inability to foreclose on the lien 

created by the deed of trust is due entirely to the banks’ refusal to acknowledge their error in having 

the wrong bank foreclose in 2010 and their failure to remedy this error by having the correct bank 

foreclose within the period dictated by the statute of limitations. 

Among the factors the court may consider in conducting its balancing test is the negligence 

of the party claiming subrogation. Id.; see also Providence Inst. for Savs. v. Sims, 441 S.W.2d 

516, 519 (Tex. 1969) (negligence on part of party seeking subrogation of some importance when 

right is wholly dependent on equitable principles). Such negligence may take the form of 

carelessness or sloppiness in the pursuit or protection of the party’s rights. In re Okedokun, 593 

B.R. 469, 548 (Bankr. S.D. Tex. 2018). For example, in Zapeda v. Federal Home Loan Mortgage 

Ass’n, the trial court concluded the lender was not entitled to equitable subrogation because the 

lender was afforded ample notice and opportunity to cure the defect in its contractual lien and 

failed to do so. No. 4:16-cv-3121, 2018 WL 781666, at *8 (S.D. Tex. Feb. 8, 2018). According 

to the court, rather than simply curing the problem, the lender chose to send the borrower a 

“nonsense response” that failed to address or cure the issue. Zapeda, 2018 WL 1947848, at *2 

(S.D. Tex. April 25, 2018). 

Similarly, in this case, the Howards notified the banks ten days after the foreclosure sale 

that the wrong bank had conducted the foreclosure. At that point, the banks had more than three 

years to correct the problem before the statute of limitations expired. Instead, the banks responded, 

without any legal basis, that the Howards’ claim was “a cause of action without recognition in 

Texas.” PNC chose to wait almost five years after being notified of the issue, and five-and-a-half 
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years after the note was accelerated, to seek foreclosure on the property in the name of the correct 

bank. The statute of limitations on foreclosures would be rendered meaningless if lenders could 

always avoid it simply by claiming equitable subrogation. See id. Based on the parties’ pleadings 

and the stipulated facts, we conclude the trial court did not abuse its discretion in refusing to award 

PNC the equitable relief it sought. We resolve the banks’ third issue against them. 

III. Suit on the Note 

In their fourth issue, the banks contend the trial court erred in failing to grant judgment in 

favor of PNC on its suit to recover on the note because the stipulated facts established its right to 

collect. The stipulated facts demonstrate, and the Howards do not dispute, that they defaulted on 

the note in 2008 and the note was properly accelerated in June 2009. PNC filed its suit to recover 

on the note in May 2015. The only affirmative defense the Howards raised to recovery on the note 

was that the claim was barred by the statute of limitations. The Howards bore the burden at trial 

of proving their limitations defense. See Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 

(Tex. 1988). 

The Howards contend that the banks’ claim to recover on the note is barred by the fouryear statute of limitations applicable to suits on a debt under section 16.004 of the civil practice 

and remedies code. See TEX. CIV. PRAC. & REM. CODE ANN. § 16.004. The banks respond that 

PNC’s claim is governed by the limitations period found in section 3.118 of the Texas Business 

and Commerce Code, which states that “an action to enforce the obligation of a party to pay a note 

payable at a definite time must be commenced within six years after the due date or dates stated in 

the note or, if a due date is accelerated, within six years after the accelerated due date.” See TEX.

BUS. & COM. CODE ANN. § 3.118(a). Because PNC filed its suit within six years of the date the 

note was accelerated, the banks contend the action was filed timely. 
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Where there is a debt secured by a note, which is in turn, secured by a lien, the note and 

lien constitute separate obligations. See Aguero v. Ramirez, 70 S.W.3d 372, 374 (Tex. App.—

Corpus Christi–Edinburg 2002, pet. denied). Although the real property lien may be time barred, 

the lender may still recover on the note under the six-year limitations period applicable to 

negotiable instruments. Id. The Howards argue the six-year limitations period does not apply in 

this case because the note at issue is not a negotiable instrument. 

The negotiability of an instrument is a question of law. Great N. Energy Inc. v. Circle 

Ridge Prod., Inc., 528 S.W.3d 644, 660 (Tex. App.—Texarkana 2017, pet. denied). A “negotiable 

instrument” is an “unconditional promise or order to pay a fixed amount of money, with or without 

interest or other charges described in the promise or order, if it . . . does not state any other 

undertaking or instruction by the person promising or ordering payment to do any act in addition 

to the payment of money. . . .” TEX. BUS. & COM. CODE ANN. § 3.104(a). An exception to this 

restriction on undertakings is that the promise or order may contain “an undertaking or power to 

give, maintain, or protect collateral to secure payment.” Id. Furthermore, a promise or order is 

not made conditional by a reference to another record for a statement of rights with respect to 

collateral, prepayment, or acceleration. Id. §3.106(b). 

The Howards assert their note is not a negotiable instrument because it contains multiple 

undertakings and instructions in addition to the payment of money. The Howards list nine different 

alleged additional undertakings that render the note non-negotiable: 

1) the payment of late fees; 

2) the reference to a deed of trust which grants additional privileges to the holder 

to demand immediate payment and states under what conditions the borrower may 

be required to make immediate payment in full; 

3) the instruction that the holder will deliver or mail notices including changes in 

the interest rate and monthly payments; 
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4) the obligation that the borrower tells the note holder, in writing, if the borrower 

opts to prepay; 

5) The instruction that if applicable law is finally interpreted so that the interest 

charged under the note or other loan charges exceed legal limits, then (a) any such 

loan charge shall be reduced by the amount necessary to reduce the charge to the 

permitted limit, and (b) any sums already collected by the lender that exceeded 

permitted limits shall be refunded to the borrower; 

6) the instruction that the lender send written notice of default; 

7) the instruction entitling the lender to be paid back by the borrower for all costs 

and attorney’s fees; 

8) the instruction that the lender send any notice that must be given to the borrower 

pursuant to the terms of the note by either delivering it or mailing it by first class 

mail; and 

9) the instruction that the borrower send any notice [that] must be given to the 

lender pursuant to the terms of the note by either delivering it or mailing it by first 

class mail. 

 With respect to late fees, the definition of a negotiable instrument states that the promise 

to pay may include “interest or other charges described in the promise.” TEX. BUS. & COM. CODE 

ANN. § 3.104(a). Late fees are clearly “other charges” that fall within the scope of the definition 

of a negotiable instrument. See William H. Burgess III, Negotiability of Promissory Notes in 

Foreclosure Cases: Ballast is not Luggage, 88-MAR Fla. B.J. 8, 15 (2014). Similarly, section 

3.106(b)(i) explicitly allows a negotiable instrument to reference a separate writing, such as a deed 

of trust, for information concerning collateral, prepayment, or acceleration. See TEX.BUS. & COM.

CODE ANN. § 3.106(b)(i). The reference to the deed of trust listed by the Howards as the second 

“additional undertaking” in the note falls squarely within the language permitted by section 

3.106(b)(i) and has no effect on the note’s negotiability. See id. § 3.106(b)(i) cmt. 1. 

 The third, fourth, sixth, eighth, and ninth alleged additional undertakings all concern the 

giving of notices. The notices involve either interest, prepayment, default, or other matters 

controlled by the note. In each case, the required notice is either incidental to the note’s 

unconditional promise to pay or a permissible undertaking to maintain or protect the collateral. 
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See id. § 3.104(a)(3)(A). The Howards cite no authority, and we have found none, that notice 

provisions of this sort would render the note non-negotiable. 

 The Howards do not explain how the fifth item on their list, otherwise known as a usury 

savings clause, constitutes an additional undertaking or otherwise affects negotiability. The clause 

merely adjusts the amount of interest charged on the note to the readily-ascertainable permitted 

legal limit. The Texas Supreme Court has held that a variable interest rate does not render a 

promissory note non-negotiable so long as the rate is readily ascertainable by any interested person. 

See Amberjoy v. Societe de Banque Privee, 831 S.W.2d 793, 797-98 (Tex. 1992). 

 Finally, the provision of the note requiring the Howards to reimburse the note holder for 

all costs and expenses incurred in enforcing the note, like the late fees discussed above, falls under 

the category of “other charges described in the promise” which are specifically permitted. TEX.

BUS. & COM. CODE ANN. § 3.104(a). The charges relate only to collecting on the indebtedness 

evidenced by the note and do not alter or expand the borrowers’ obligation to pay the amount fixed 

by the note. As such, the provision does not impact the note’s negotiability. See Burgess, supra, 

at 17. 

 Because the note at issue is a negotiable instrument, it is subject to a six-year limitations 

period rather than a four-year period. See TEX. BUS. & COM. CODE ANN. § 3.118(a); Aguero, 70 

S.W.3d at 374. The stipulated facts and pleadings in the record show the Howards are in default 

on the note and PNC brought its claim to recover within six years of the date its claim accrued. 

Accordingly, we conclude the trial court erred in rendering judgment that the note was void and 

unenforceable and in failing to render judgment in favor of PNC on its claim to recover on the 

note. We resolve the banks’ fourth issue in their favor. 

 
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IV. Findings of Fact and Conclusions of Law 

Although requested by the banks, the trial court in this case did not file findings and 

conclusions of law. The banks request in their first issue that we instruct the trial court to file 

findings and conclusions so that they “may better show this Court where reversible error exists 

within the trial record.” Given the procedural history and record in this case, we conclude findings 

and conclusions are neither necessary nor proper. 

 The validity of the 2010 foreclosure on the Howards’ property was resolved by summary 

judgment. Findings of fact and conclusions of law are improper in a summary judgment 

proceeding. See Stangel v. Perkins, 87 S.W.3d 706, 709 (Tex. App.—Dallas 2002, no pet.). 

 The remainder of the case was resolved in a bench trial that was conducted almost entirely 

on stipulated facts. At the beginning of the trial, counsel for the banks stated that the questions 

being presented to the court “are basically questions of law, not so much fact.” Although the 

Howards testified at trial, the banks do not explain how their testimony had any bearing on the 

claims presented. Nor do they explain how the Howards testimony presented any conflicting 

evidence that would require the trial court to decide a question of fact. The banks have contended 

on appeal that PNC’s lien rights, as well as its right to recover under the note, could both be 

determined entirely by the stipulated facts. Generally, findings of fact and conclusions of law have 

no place in a trial based on stipulated facts. See Int’l Union, United Auto., Aerospace and Agric. 

Implement Workers of A.-UAW, v. Gen. Motors Corp., 104 S.W.3d 126, 129 (Tex. App.—Fort 

Worth 2003, no pet.). The banks have failed to show how this case is an exception to that rule. 

We resolve their first issue against them. 

 
 –18– 

 

Conclusion

 Based on the foregoing, we affirm the trial court’s partial summary judgment in favor of 

the Howards on their claim against Bank of Indiana. We further affirm the trial court’s judgment 

declaring that any lien or power of sale held by the banks on the Howards’ property is void and 

unenforceable. We reverse that portion of the trial court’s judgment declaring the note held by 

PNC to be void and unenforceable and render judgment in favor of PNC on their note claim. We 

remand this cause to the trial court to determine the proper amount recoverable by PNC on its 

claim to enforce the note. 

 

 

 

171484F.P05 

 

/Amanda L. Reichek/ 

AMANDA L. REICHEK 

JUSTICE 
 –19– 

S 

Court of Appeals 

Fifth District of Texas at Dallas 

JUDGMENT 

PNC MORTGAGE, A DIVISION OF PNC 

BANK, N.A. SUCCESOR TO NATIONAL 

CITY BANK AND NATIONAL CITY 

MORTGAGE, A DIVISION OF 

NATIONAL CITY BANK OF INDIANA, 

Appellants 

No. 05-17-01484-CV V. 

JOHN HOWARD AND AMY HOWARD, 

Appellees 

 On Appeal from the 199th Judicial District 

Court, Collin County, Texas 

Trial Court Cause No. 199-01559-2010. 

Opinion delivered by Justice Reichek. 

Justices Whitehill and Molberg 

participating. 

 In accordance with this Court’s opinion of this date, the judgment of the trial court is 

AFFIRMED in part and REVERSED in part. We REVERSE that portion of the trial court's 

judgment declaring the note held by PNC MORTGAGE, A DIVISION OF PNC BANK, N.A., 

SUCCESSOR TO NATIONAL CITY BANK, to be void and unenforceable. We RENDER 

judgment in favor of PNC MORTGAGE, A DIVISION OF PNC BANK, N.A., SUCCESSOR 

TO NATIONAL CITY BANK on its claim against JOHN HOWARD and AMY HOWARD to 

recover on the note. In all other respects, the trial court's judgment is AFFIRMED. We 

REMAND this cause to the trial court for determination of the proper amounts recoverable by 

PNC MORTGAGE, A DIVISION OF PNC BANK, N.A., SUCCESSOR TO NATIONAL CITY 

BANK. 

 It is ORDERED that each party bear its own costs of this appeal. 

Judgment entered June 24, 2019