Opinion ID: 4155098
Heading Depth: 2
Heading Rank: 2

Heading: analysis

Text: We review a district court’s grant of summary judgment de novo. Davis v. Hernandez, 798 F.3d 290, 292 (5th Cir. 2015). Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A genuine dispute of material fact exists when the ‘evidence is such that a reasonable jury could return a verdict for the nonmoving party.’” E.E.O.C. v. LHC Grp., Inc., 773 F.3d 688, 694 (5th Cir. 2014) (quoting Royal v. CCC & R Tres Arboles, L.L.C., 736 F.3d 396, 400 (5th Cir. 2013)). The parties agree that Texas law governs this case. “In determining questions of Texas law, this court looks to the decisions of the Texas Supreme Court, which are binding.” Packard v. OCA, Inc., 624 F.3d 726, 729 (5th Cir. 2010). Decisions issued by Texas intermediate appellate courts can “provide guidance, but are not controlling.” Id. In the absence of controlling precedent from the Texas Supreme Court, our Court must determine how the Texas Supreme Court would rule if faced with the same legal question. Id. at 729–30. Under Texas law, a foreclosure suit must be filed within four years after the cause of action accrues. Tex. Civ. Prac. & Rem. Code § 16.035(a). A cause of action for foreclosure does not accrue “until the maturity date of the last note, obligation, or installment.” Id. § 16.035(e). “On the expiration of the fouryear limitations period, the real property lien and a power of sale to enforce the real property lien become void.” Id. § 16.035(d). If a note contains an optional acceleration clause, defaulting on the note does not automatically begin the statute of limitations. Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001). Rather, the statute of limitations does not start to run until the holder of the note actually exercises its option to accelerate. Id. 5 No. 15-20615 “Effective acceleration requires two acts: (1) notice of intent to accelerate, and (2) notice of acceleration.” Id. Each notice must be “clear and unequivocal.” Id. (quoting Shumway v. Horizon Credit Corp., 801 S.W.2d 890, 893 (Tex. 1991)). However, “[a]bandonment of acceleration has the effect of restoring the contract to its original condition,” including “restoring the note’s original maturity date.” Boren v. U.S. Nat’l Bank Ass’n, 807 F.3d 99, 104 (5th Cir. 2015) (quoting Khan v. GBAK Props., Inc., 371 S.W.3d 347, 353 (Tex. App.—Houston [1st Dist.] 2012, no pet.)). Acceleration of a note may be abandoned “by agreement or other action of the parties.” Id. (quoting Khan, 371 S.W.3d at 353). A note holder may even “unilaterally abandon acceleration after its exercise, so long[] as the borrower neither objects to abandonment nor has detrimentally relied on the acceleration.” Id. at 105. “Texas courts have framed the issue of abandonment of acceleration by reference to traditional principles of waiver.” Id. “Under Texas law, the elements of waiver include: (1) an existing right, benefit, or advantage held by a party; (2) the party’s actual knowledge of its existence; and (3) the party’s actual intent to relinquish the right, or intentional conduct inconsistent with the right.” Id. (quoting Thompson v. Bank of Am. Nat’l Ass’n, 783 F.3d 1022, 1025 (5th Cir. 2015)). “Waiver is a question of law when the facts that are relevant to a party’s relinquishment of an existing right are undisputed.” Id. at 106. All parties agree that Justice’s mortgage was accelerated when EMC sent Justice a notice of acceleration in March 2009. Under Texas law, this means Defendants’ cause of action for foreclosure accrued at that time. See Holy Cross, 44 S.W.3d at 566. Justice argues that because Defendants’ cause of action accrued in March 2009, Wells Fargo’s attempt to foreclose on his property in October 2014 is barred by the statute of limitations provided by Texas Civil Practice & Remedies Code § 16.035(a). Because the 2009 notice of 6 No. 15-20615 acceleration was issued more than four years prior to Defendants’ October 2014 attempt to foreclose, in order to resolve this appeal, we must determine whether Defendants abandoned the 2009 acceleration. Defendants argue that they abandoned the 2009 acceleration when they accepted two payments of $3,250 from Justice without exercising any of their available remedies. In Holy Cross Church of God in Christ v. Wolf, the Texas Supreme Court held that a note holder can abandon acceleration “if the holder continues to accept payments without exacting any remedies available to it upon declared maturity.” 44 S.W.3d at 566–67. We recently applied this precedent in Rivera v. Bank of America, N.A., 607 F. App’x 358 (5th Cir. 2015) (per curiam). In Rivera, the borrowers received a notice of acceleration in 2004. Id. at 359. In 2006, the lender accepted several payments from the borrowers and applied them toward the loan’s balance. Id. Citing Holy Cross, we concluded that absent any “competent contrary evidence” of the lender’s intent, the lender abandoned its 2004 acceleration by accepting partial payments from the borrowers. Id. at 361. EMC accepted two partial payments from Justice for $3,250 each in November and December of 2009. The district court found that acceptance of these payments was evidence of EMC’s intent to abandon the 2009 acceleration, and we agree. But, such evidence is not necessarily conclusive. See Martin v. Fed. Nat’l Mortg. Ass’n, 814 F.3d 315, 318 (5th Cir. 2016) (“Accepting a payment after acceleration could be intentional conduct inconsistent with the acceleration that—in some circumstances—amounts to an abandonment or waiver of the acceleration.” (emphasis added)); Holy Cross, 44 S.W.3d at 566–67 (explaining that a note holder “can abandon acceleration if the holder continues to accept payments without exacting any remedies available to it upon declared maturity.” (emphasis added)). Therefore, we must determine whether Justice “point[s] to any competent contrary evidence” to 7 No. 15-20615 support his argument that Defendants did not intend to abandon the 2009 acceleration by accepting partial payments. Rivera, 607 F. App’x at 361. On appeal, Justice argues that because Defendants made “such strong disclaimer[s]” of abandonment, they did not abandon acceleration by accepting Justice’s November 2009 and December 2009 payments. He argues that in order to abandon acceleration Defendants must have demonstrated their intent to abandon through other actions, “such as a firm offer to accept less than full payoff to reinstate the loan.” To support his argument, Justice focuses on what he characterizes as “disclaimers” of abandonment in EMC’s proposed repayment plan and the security instrument governing Defendants’ lien on the property. With regard to the repayment agreement, Justice appears to argue that even though the agreement was never an effective contract between the parties, it served to reaffirm the 2009 acceleration. As a preliminary matter, Defendants contend that Justice has waived this argument. Justice argued to the district court that the repayment plan was effective and binding on the parties. On appeal, Justice argues that the repayment agreement was actually a unilateral offer to abandon acceleration, which he never accepted. In his reply brief, Justice concedes that this argument was not made to the district court but argues that we should still address it because it is a pure question of law. Arguments that are not first raised to the district court are waived. State Indus. Prods. Corp. v. Beta Tech., Inc., 575 F.3d 450, 456 (5th Cir. 2009). In our Circuit, waived arguments can be considered on appeal if the party asserting the argument can demonstrate “extraordinary circumstances.” Id. “Extraordinary circumstances exist when the issue involved is a pure question of law and a miscarriage of justice would result from our failure to consider it.” Id. (quoting N. Alamo Water Supply Corp. v. City of San Juan, 90 F.3d 910, 916 (5th Cir. 1996)). Because Justice has failed to demonstrate that 8 No. 15-20615 extraordinary circumstances exist, we decline to address his argument that the 2009 repayment agreement served to reaffirm the 2009 acceleration. Justice also argues on appeal that the 2006 security instrument governing Defendants’ lien on the property contains a “disclaimer[]” of abandonment. The provision provides: Any forbearance by Lender in exercising any right or remedy including, without limitation, Lender’s acceptance of payments from third persons, entities or Successors in Interest of Borrower or in amounts less than the amount then due, shall not be a waiver of or preclude the exercise of any right or remedy. Justice appears to argue that because this provision serves as a “disclaimer[]” of abandonment, Defendants cannot abandon acceleration by accepting payments without additional evidence of their intent to abandon. But Justice has failed to adequately explain how this provision of the security instrument relates to abandonment of an existing acceleration. Abandonment of an existing acceleration and waiver of Defendants’ right to accelerate in the future are two distinct issues and this provision only addresses the latter, providing Defendants with a “reservation of rights if [they] choose[] to refrain from exercising a right or remedy under the deed of trust.” Wells v. Bank of Am., N.A., No. 3:13–CV–3658–M, 2015 WL 4269089, at  (N.D. Tex. July 14, 2015); see also Mendoza v. Wells Fargo Bank, N.A., No. H–14–554, 2015 WL 338909, at –5 (S.D. Tex. Jan. 23, 2015); cf. Martin, 814 F.3d at 319 (observing that identically worded language in a security instrument entitled lender “to defer acceleration and foreclosure (and any other remedy) after default without waiving its rights”). Similar to Rivera, Defendants acceptance of Justice’s two payments of $3,250, while refraining from pursuing any of their available remedies against Justice, is compelling evidence of Defendants’ intent to abandon the 2009 acceleration. Because Justice has failed to present contrary evidence that 9 No. 15-20615 raises a genuine dispute of material fact as to Defendants’ intent, the district court is affirmed.