Court Opinion

ID: 9378685
Source: CourtListenerOpinion
Date Created: 2023-03-12 08:09:01.574415+00
Date Added: 2024-06-11T17:15:38.708969
License: Public Domain

Affirmed and Memorandum Opinion filed March 7, 2023.

                                             In The

                        Fourteenth Court of Appeals

                                    NO. 14-21-00362-CV

                      1435 CRESCENT OAK TRUST, Appellant

                                                V.
U.S. BANK N.A., AS TRUSTEE ON BEHALF OF THE HOLDERS OF THE
J.P. MORGAN MORTGAGE ACQUISITION TRUST 2006-WMC4 ASSET
   BACKED PASS-THROUGH CERTIFICATES, SERIES 2006-WMC4,
    THROUGH ITS MORTGAGE SERVICER, SELECT PORTFOLIO
                     SERVICING, INC., Appellee

                  On Appeal from the 434th Judicial District Court
                             Fort Bend County, Texas
                      Trial Court Cause No. 16-DCV-237591

                              MEMORANDUM OPINION
       Appellant 1435 Crescent Oak Trust appeals the trial court’s summary
judgment in favor of appellee US Bank.1 Appellant raises one issue on appeal, that
the trial court erred in granting summary judgment in favor of appellee. We affirm.

       Appellee’s full title is U.S. Bank, N.A., as Trustee on behalf of holders of the J.P. Morgan
       1

Mortgage Acquisition Trust 2006-WMC4 Asset Backed Pass-Through Certificates, Series 2006-
       Appellant argues that the trial court erred in concluding that appellee
abandoned its acceleration of the indebtedness because “the one piece of
correspondence . . . does not prove abandonment as a matter of law” or
“unequivocally manifest an intent to abandon the prior accelerations.” Appellant
argues that because of this, a genuine issue of material fact exists as to appellee’s
intent to abandon the prior acceleration.

A.     General Legal Principles

       We review the trial court’s grant of a motion for summary judgment de novo.
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.
2009). We take as true all evidence favorable to the non-movant and draw every
reasonable inference and resolve all doubts in favor of the non-movant. M.D.
Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23–24 (Tex. 2000) (per
curiam).    “A party moving for summary judgment must conclusively prove all
elements of its cause of action or defense as a matter of law.” Holy Cross Church
of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001).

       When a noteholder has accelerated a note, the holder can abandon acceleration
if the holder continues to accept payments without exacting any remedies available
to it upon declared maturity. Id.; see also Pitts v. Bank of N.Y. Mellon Tr. Co., 583
S.W.3d 258, 262 (Tex. App.—Dallas 2018, no pet.).                    A lender may show
abandonment by conduct. Pitts, 583 S.W.3d at 262; Khan v. GBAK Props., Inc., 371
S.W.3d 347, 353 (Tex. App.—Houston [1st Dist.] 2012, no pet.). “A noteholder that
has accelerated the maturity date of a loan may unilaterally abandon that acceleration
and return the note to its original terms.” Pitts, 583 S.W.3d at 262. This may be
done through notice to the borrower expressly stating the holder is abandoning

WMC4, through its Mortgage Servicer, Select Portfolio Servicing, Inc., but will be referred to
herein as either “appellee” or “US Bank.”

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acceleration or through other conduct inconsistent with acceleration. Id. at 262–63
(“[T]he supreme court has not addressed whether a holder establishes abandonment
of acceleration as a matter of law when the borrower does not make any payments,
the holder does not expressly abandon the earlier acceleration, and the only evidence
of abandonment is the holder’s notice to a borrower that the amount currently due is
less than the full accelerated balance.”). Abandonment has the effect of restoring
the original maturity date of the note. Khan, 371 S.W.3d at 353.

      “Whether a lender has abandoned an acceleration is generally a question of
fact.” Swoboda v. Ocwen Loan Servicing, LLC, 579 S.W.3d 628, 633 (Tex. App.—
Houston [14th Dist.] 2019, no pet.). “But when the facts are admitted or clearly
established, abandonment may sometimes be determined as a matter of law.” Id.;
accord Bracken v. Wells Fargo Bank, N.A., No. 05-16-01334-CV, 2018 WL
1026268, *5 (Tex. App.—Dallas Feb. 23, 2018, pet. denied) (mem. op.).

B.    Background

      Appellant is the owner of the real property located at 1435 Crescent Oak
Drive, Missouri City, Texas (Property). The dispute in this case is whether appellee
holds a valid lien on the Property. Appellee filed suit for a declaratory judgment
that its lien on the Property is valid. Appellant counterclaimed, seeking a declaration
that the statute of limitations had expired on appellee’s lien and seeking a declaration
that such lien is void. Appellant’s claims are premised on the argument that in
September 2012, appellee accelerated the indebtedness and maturity of the note at
issue and had not proceeded to foreclosure on or before the four-year statute of
limitations had expired. Because the statute of limitations had run in September
2016 and appellee had not proceeded to foreclosure, appellant contends that the lien
on the Property is invalid. Appellee argued that it has a valid lien on the Property
because it abandoned its prior acceleration and the original maturity date of the note

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was reimplemented, precluding the statute of limitations from expiring in 2016.

         Appellee filed a motion for summary judgment arguing that as a matter of
law, appellee abandoned its prior acceleration through a letter dated May 16, 2014
(May Letter). The May Letter indicates that it “provides notice” that there has been
a default in payments under the note and security instrument, and the letter is a
formal demand for payment. “To cure this default, you must pay the Amount
Required to Cure together with payment which may subsequently become due, on
or before the Cure Date.” The May Letter further provides that “the total amount
due and required to cure the default on your loan is $111,272.37 (Amount Required
to Cure).” Finally, the May Letter states that if the borrower failed to cure the
default, the noteholder “will accelerate all payments owing on your Note and require
that you pay all payments owing and sums secured by the Security Instrument in
full.”

         The trial court granted summary judgment in favor of appellee, concluding
that appellee had conclusively shown abandonment of its prior acceleration of the
indebtedness and, therefore, held a valid lien on the Property. This appeal followed.

C.       Analysis

         Appellant argues the evidence “demonstrates a genuine issue of material fact
on [appellee’s] intent to abandon the prior acceleration.” First, appellant contends
that the May Letter is not an “unequivocal abandonment” of acceleration and a
“reasonable person . . . would just as easily conclude it was a reminder of their right
to reinstate before a foreclosure sale as it was some kind of abandonment of the prior
acceleration.” This is so, appellant argues, because section nineteen of the deed of
trust “allows the borrower to reinstate the Loan five days before a foreclosure sale
by paying less than the fully accelerated amount.” We disagree with appellant’s
contentions.

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      In a section entitled “Your Rights,” the May Letter indicates that the borrower
has the right to reinstate the loan “even after foreclosure has been initiated and prior
to sale.”   It goes on to state that if foreclosure has been initiated, then any
reinstatement amounts must be paid in certified funds. The letter does not indicate
whether or not foreclosure has been initiated, simply that even if foreclosure has
been initiated that it could be stopped by paying the reinstatement amount as
provided under the terms of the contract between the borrower and appellee.

      We further conclude that the cases cited by appellant are distinguishable. See
Colbert v. Wells Fargo Bank, N.A., 850 F. App’x 870, 875 (5th Cir. 2021); Lyons v.
Select Portfolio Servicing, Inc., 748 F. App’x 610, 611–12 (5th Cir. 2019). In Lyons,
after accelerating, the lender sent a reinstatement notice informing the borrower that
payment of an amount less than the fully accelerated amount could return the loan
to its pre-acceleration status. Lyons, 748 F. App’x at 611. In Colbert the lender sent
a notice of acceleration, then sent a regular monthly statement requesting payment
for less than the full amount of the accelerated loan only four days later. Colbert,
850 F. App’x at 875. The courts in both Lyons and Colbert concluded that the later
notices sent by the lenders did not establish a clear intent to abandon acceleration.
Colbert, 850 F. App’x at 875; Lyons, 748 F. App’x at 612. In both cases it was the
borrower arguing, post-foreclosure, that the lender had abandoned acceleration and
wrongfully foreclosed. Colbert, 850 F. App’x at 875–76; Lyons, 748 F. App’x at
611–12.

      Here, the May Letter is entitled “Demand letter – Notice of Default,” detailed
the amount needed to cure the default (which is undisputedly less than the full
acceleration amount), and indicated if the amount needed to cure was not received
then the “Noteholder will accelerate all payments owing on your Note and require
that you pay all payments owing and sums secured by the Security Instrument in
full.” The letter demonstrates appellee’s willingness to accept less than the fully
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accelerated balance and failure to make such payment would result in acceleration
at a time in the future. This shows a clear departure from the prior acceleration and
abandonment of the prior acceleration in favor of either a cure payment or
acceleration at some future date. See Laguette v. U.S. Bank, N.A., No. 03-19-00042-
CV, 2020 WL 1908314, *3 (Tex. App.—Austin Apr. 17, 2020, no pet.) (mem. op.)
(letter to debtor demanding payment of missed payments and other fees and stating
that the “mortgage payments will be accelerated” if unpaid conclusively established
lender’s intent to abandon prior acceleration); Farmehr v. Deutsche Bank Nat’l Trust
Co., No. 05-17-00563-CV, 2018 WL 2749634, *3 (Tex. App.—Dallas May 31,
2018, no pet.) (mem. op.) (lender conclusively established abandonment of
acceleration by letter entitled “DEMAND LETTER—NOTICE OF DEFAULT”
stating that (1) the borrowers were in default; (2) the default could be cured by
paying the past-due amounts, late charges, and advance within thirty days; and (3)
the lender would accelerate the note if the borrowers did not pay the cure amount);
Brannick v. Aurora Loan Servs., LLC, No. 03-17-00308-CV, 2018 WL 5729104, *3
(Tex. App.—Austin Nov. 2, 2018, pet. denied) (mem. op.) (demand for payment of
amount less than the entire accelerated amount and stating that failure to pay would
result in acceleration conclusively established abandonment of acceleration);
Emmert v. Wilmington Savs. Fund Society, FSB, No. 02-17-00119-CV, 2018 WL
1005002, *3 (Tex. App.—Fort Worth Feb. 22. 2018, no pet.) (mem. op.) (same);
NSL Prop. Holdings, LLC v. Nationstar Mortg., LLC, No. 02-16-00397-CV, 2017
WL 3526352, *3 (Tex. App.—Fort Worth Aug. 17, 2017, pet. denied) (mem. op.)
(same).

      Appellant argues that this case is distinguishable because after the May Letter,
appellee sent another letter to the borrower that evidences a lack of intent to abandon
acceleration.   The August 2014 letter was sent pursuant to the Federal Debt
Collection Practices Act (FDCPA Letter). Appellant argues that the FDCPA Letter

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“demands” payment of the fully accelerated amount and, as a result, indicates that
appellee did not abandon the acceleration. We disagree.

       The FDCPA Letter in entitled “NOTICE REQUIRED BY THE FEDERAL
FAIR DEBT COLLECTION PRACTICES ACT, 15 U.S.C. SECTION 1692, et
seq.” and indicates that “[a]s of August 22, 2014, our client has advised that the
amount of the debt is $438,695.76.” The FDCPA Letter states that the “amount on
this notice should not be used as a payoff figure. If you would like to receive a
payoff and/or reinstatement figure please submit a written request . . . .”

       The FDCPA Letter does not demand payment and instead merely indicates
the amount of the debt owed.2 Appellant does not cite to any case law that supports
its argument that an “amount owed” in an FDCPA required communication is
evidence of acceleration of an indebtedness.               Instead, appellant argues that a
“reasonable juror . . . could determine that a reasonable person in the borrower’s
shoes would not think the effect of their prior failure to cure was to be disregarded.”
However, when determining whether waiver occurred, we examine the intention of
the lender to relinquish a known right, not whether the debtor understood that
intention. See Pitts, 583 S.W.3d at 262 (listing elements of waiver, including “the
party’s actual intent to relinquish the right, or intentional conduct inconsistent with
the right”); see also Ulico Cas. Co. v. Allied Pilots Ass’n, 262 S.W.3d 773, 778 (Tex.
2008) (listing elements of waiver).

       Appellant next argues that the anti-waiver provision contained in the deed of
trust indicates a lack of intent to abandon the acceleration:

       Any forbearance by Lender in exercising any right or remedy including,

       2
         “The term ‘debt’ means any obligation or alleged obligation of a consumer to pay money
arising out of a transaction in which the money, property, insurance, or services which are the
subject of the transaction are primarily for personal, family, or household purposes, whether or not
such obligation has been reduced to judgment.” 15 U.S.C. § 1692a (5).

                                                 7
      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.

Appellant argues our sister court applied a substantially similar waiver clause and
concluded that the lender did not conclusively establish abandonment. See Hardy v.
Wells Fargo Bank, N.A., No. 01-12-00945-CV, 2014 WL 7473762, *5 (Tex. App.—
Houston [1st Dist.] Dec. 30, 2014, no pet.) (mem. op.).

      In Hardy, the parties entered into two agreements after the borrowers had
defaulted. In the agreements, the borrowers acknowledged the default in payment
on the original indebtedness and agreed to pay the indebtedness in installment
payments over a period. Id. at *2. The agreements also provided that the lender’s
acceptance of any payments “will not be deemed to affect the acceleration of the
Note and/or Mortgage in the event of default under the terms of this agreement.” Id.
It was undisputed that the borrowers made some payments but defaulted again. Id.
The lender argued that it abandoned acceleration through the agreements and by
accepting partial payments pursuant to such agreements, despite the “anti-waiver”
language within the agreements. See id. The court concluded that because of the
anti-waiver provision within the agreements, the lender did not establish its right to
summary judgment as a matter of law and there was a fact issue as to whether the
lender abandoned acceleration. Id. at *5.

      Our sister court recently noted Hardy “does not stand for the proposition that
anti-waiver provisions preclude abandonment of prior accelerations.”            PHH
Mortgage Corp. v. Aston, No. 01-21-00057-CV, 2022 WL 3363196, *7 (Tex.
App.—Houston [1st Dist.] Aug. 16, 2022, pet. denied) (mem. op.). Here, unlike the
agreements in Hardy, the May Letter has no language within it regarding “anti-
waiver” of the prior acceleration of the indebtedness and is, therefore,

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distinguishable. We also recently considered and rejected the argument that a
provision within the deed of trust prevents the lender from abandoning acceleration.
See Citibank, N.A. v. Pechua, Inc., 624 S.W.3d 633 (Tex. App.—Houston [14th
Dist.] 2021, pet. denied) (“Contrary to Pechua’s assertion, this clause does not
prohibit the Bank from abandoning a prior acceleration. The abandonment of a
specific event of acceleration and the waiver of the right to accelerate and foreclose
are distinct concepts.”).

         We overrule appellant’s sole issue.3

                                         CONCLUSION

         Having overruled appellant’s sole issue, we affirm the judgment of the trial
court.

                                             /s/       Ken Wise
                                                       Justice

Panel consists of Justices Wise, Poissant, and Wilson.

         3
         Appellant also makes arguments that appellee wrongly asserts that the trial court
dismissed appellant’s statute of limitations claim regarding the lien and that appellee made a
“prima facie” case that limitations had expired. Appellant does not argue that trial court erred in
denying its summary judgment motion. We need not address these sub-points because even
assuming them to be true, they do not change the disposition on appeal. See Tex. R. App. P. 47.1.

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