Court Opinion

ID: 6330350
Source: CourtListenerOpinion
Date Created: 2022-04-13 00:00:45.414458+00
Date Added: 2024-06-11T09:22:59.923718
License: Public Domain

Case: 21-20384    Document: 00516274102        Page: 1    Date Filed: 04/08/2022

          United States Court of Appeals
               for the Fifth Circuit                            United States Court of Appeals
                                                                         Fifth Circuit

                                                                       FILED
                                No. 21-20384                        April 8, 2022
                                                                  Lyle W. Cayce
                                                                       Clerk
   Deborah Cross, formerly known as
   Deborah Cross-Farron,

                                                         Plaintiff—Appellant,

                                    versus

   The Bank of New York Mellon, formerly known as Bank
   of New York, as Trustee for the Certificate holders of
   CWALT, Inc., Alternative Loan Trust 2004-30CB;
   NewRez, L.L.C., doing business as Shellpoint Mortgage
   Servicing,

                                                     Defendants—Appellees.

                 Appeal from the United States District Court
                     for the Southern District of Texas
                          USDC No. 4:20-CV-1322
Case: 21-20384        Document: 00516274102             Page: 2      Date Filed: 04/08/2022

                                        No. 21-20384

   Before King, Jones, and Duncan, Circuit Judges.
   Per Curiam:*
           Deborah Cross executed a mortgage note and deed of trust that
   granted the note holder a lien against her residential property. Cross has not
   paid her mortgage or property taxes since December 2014. The Bank of New
   York Mellon Corporation (“BONYM”) holds the note and originally
   accelerated its maturity date on February 11, 2016. BONYM attempted to
   schedule foreclosure sales in June 2018 and September 2019, both within the
   four-year limitations period provided by Tex. Civ. Prac. & Rem. Code
   § 16.035. But it was thwarted by temporary restraining orders (“TROs”)
   entered by Texas state courts. 1 On February 14, 2020, NewRez LLC d/b/a
   Shellpoint Mortgage Servicing (“Shellpoint”), which services Cross’s
   mortgage, sent a letter that requested payment of less than the accelerated
   amount and reflected the loan’s original maturity date.
           Cross brought this action against BONYM and Shellpoint
   (“Defendants”) to quiet title to the property in her name and to obtain a
   declaration that the statute of limitations to foreclose had lapsed. BONYM
   counterclaimed, inter alia, for breach of contract and “a judgment allowing it
   to foreclose its lien on the property in accordance with the deed of trust and
   Texas property code section 51.002, or alternatively, a judgment for judicial
   foreclosure.”      Defendants and Cross eventually moved for summary

           *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
           1
             The 2018 TRO enjoined BONYM and its prior loan servicer from “proceeding
   with or attempting to sell or foreclose upon the [Property,]” among other conduct for 11
   days (May 31 to June 11, 2018). The 2019 TRO and the extension order enjoined the prior
   loan servicer’s counsel “and all substitute trustees” from “selling [the Property] at the
   foreclosure scheduled for September 3, 2019[]” for 19 days (August 30 to September 18,
   2019).

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Case: 21-20384         Document: 00516274102               Page: 3      Date Filed: 04/08/2022

                                          No. 21-20384

   judgment on Cross’s claims and BONYM’s counterclaims. 2 The district
   court denied Cross’s motion and granted Defendants’ motion on Cross’s
   claims before also granting BONYM’s motion on its breach of contract and
   non-judicial foreclosure counterclaims and entering final judgment in favor
   of BONYM. Cross timely appealed.
           This court reviews applications of state substantive law and grants of
   summary judgment de novo. Renfroe v. Parker, 974 F.3d 594, 599 (5th Cir.
   2020) (citations omitted). Federal Rule of Civil Procedure 56(a) requires
   courts to enter summary judgment when a movant establishes that “there is
   no genuine dispute as to any material fact and [it] is entitled to judgment as a
   matter of law.”
           The district court correctly determined that the TROs tolled the
   limitations period 30 days, extending the four-year deadline to foreclose from
   February 11, 2020, to March 12, 2020. “[L]enders have a substantive right
   to elect judicial or nonjudicial foreclosure in the event of a default,” and the
   time during which a lender “is prevented from exercising [its] legal remedy
   by the pendency of legal proceedings . . . should not be counted against [it] in
   determining whether limitations have barred [its] right.” 3 Douglas v. NCNB

           2
             Cross moved for summary judgment on her quiet title and declaratory judgment
   clams while also moving for summary judgment on BONYM’s counterclaims for breach of
   contract and judicial foreclosure. The only claims she did not move on were her own claim
   for attorney’s fees and BONYM’s non-judicial foreclosure and alternative subrogation
   counterclaims.
           3
             Cross cites two decisions that she argues warrant a contrary determination, but
   they are distinguishable. The court in Landers v. Nationstar Mortg., LLC, determined that
   an injunction preventing a lender from non-judicially foreclosing on a property did not toll
   the statute of limitations for judicial foreclosure. 461 S.W.3d 923, 926-27 (Tex. App.—
   Tyler 2015, pet. denied) (citations omitted). But, after the injunction expired, the lender
   only sought judicial foreclosure. Id. at 925-26. Landers is distinguishable because the lender
   effectively waived its choice of remedies by not pursuing both judicial and non-judicial
   foreclosure after the injunction expired. The court in U.S. ROF III LEGAL TITLE TRUST

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Case: 21-20384        Document: 00516274102              Page: 4       Date Filed: 04/08/2022

                                         No. 21-20384

   Tex. Nat’l Bank, 979 F.2d 1128, 1130 (5th Cir. 1993); Jackson v. Johnson,
   950 F.2d 263, 265 (5th Cir. 1992) (collecting cases). The TROs restrained
   BONYM from pursuing its preferred foreclosure remedy for 30 days and
   therefore tolled the limitations period for non-judicial and judicial
   foreclosure until March 12, 2020.
           The district court also correctly found that “Shellpoint effectively
   decelerated [Cross’s] loan on February 14, 2020, thus resetting the clock on
   limitations before they ran on March 12, 2020.” In Texas, “a lender may
   unilaterally abandon acceleration of a note,” thereby restoring the original
   maturity date and resetting the running of limitations, “by sending notice to
   the borrower that the lender is no longer seeking to collect the full balance of
   the loan and will permit the borrower to cure its default by providing
   sufficient payment to bring the note current under its original terms.” Boren
   v. U.S. Nat’l Bank Ass’n, 807 F.3d 99, 105 (5th Cir. 2015). Cross “received
   unequivocal notice of Shellpoint’s intent to decelerate on February 14,
   2020,” when it sent the letter seeking to collect less than the full balance of
   her loan and restoring the original maturity date. The letter sufficiently
   evidenced abandonment of the prior acceleration and reset the limitations
   period.
           Because BONYM can legally enforce the note and the deed of trust, it
   “is entitled as a matter of law to a judgment allowing it to [non-judicially]
   foreclose its lien on the Property in accordance with the Deed of Trust and
   Texas Property Code § 51.002.” BONYM also “satisfied all the elements of

   2015-I, v. Morlock L.L.C., found “no evidence of a legal impediment that prevented [the
   lender] from asserting and preserving its non-judicial foreclosure remedy within the four-
   year statute of limitations so as to warrant a tolling of limitations during the pendency of
   [the borrower’s] first suit. No. 14-18-00332-CV, 2020 WL 205970, at *5 (Tex. App.—
   Houston [14th Dist.] 2020, no pet.) (mem. op.). But, critically, “the record [did] not
   reveal[] an injunction or restraining order.” Id. That decision is wholly inapposite.

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                                   No. 21-20384

   a breach of contract claim[]” because Cross “does not dispute that BONYM
   performed its obligations under the Note, nor does she dispute that she
   breached by failing to pay the required monthly installments[]” or that “her
   breach damaged BONYM . . . .”       For these reasons, the district court
   correctly granted BONYM’s motion for summary judgment on its breach of
   contract and non-judicial foreclosure counterclaims, granted Defendants’
   motion for summary judgment rejecting Cross’s claims, and denied Cross’s
   summary judgment motion.
         The judgment of the district court is AFFIRMED.

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