Court Opinion

ID: 2671893
Source: CourtListenerOpinion
Date Created: 2014-05-01 00:01:21.870406+00
Date Added: 2024-06-11T13:05:33.364408
License: Public Domain

Case: 13-50089             Document: 00512612047           Page: 1     Date Filed: 04/29/2014

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                                       United States Court of Appeals
                                                                                                Fifth Circuit

                                                                                              FILED
                                            No. 13-50089                                  April 29, 2014
                                                                                         Lyle W. Cayce
In the Matter of: ERIC BENJAMIN ERICKSON,                                                     Clerk

                                                          Debtor
------------------------------

ERIC ERICKSON,

                                                           Appellant
v.

WELLS FARGO, N.A., as Trustee for Structured Assets Securities
Corporation Amortizing Residential Collateral Mortgage Pass- Through
Certificates, Series 2002- BC8,

                                                          Appellee

--------------------------------------------------------------------------
Consolidated With 13-50143

In the Matter of: ERIC BENJAMIN ERICKSON,

                                                          Debtor
-----------------------------

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee for
Structured Assets Securities Corporation Amortizing Residential Collateral
Trust, Mortgage Pass-Through Certificates, Series 2002-BC8,

                                                          Appellant
v.

ERIC ERICKSON,
                                                          Appellee
     Case: 13-50089      Document: 00512612047         Page: 2    Date Filed: 04/29/2014

                                      No. 13-50089

                  Appeals from the United States District Court
                        for the Western District of Texas
                                No. 1:11-CV-722

Before JONES, WIENER and GRAVES, Circuit Judges.
EDITH H. JONES, Circuit Judge:*
       Wells Fargo Bank (“Wells Fargo” or “the bank”) has been attempting to
foreclose on this fraudulently procured home equity loan for nearly a decade.
When the bank finally obtained a judgment from the bankruptcy court
purporting to “lift the automatic stay” concerning debtor Eric Erickson’s
homestead, Erickson did not file a timely notice of appeal.                His attorney,
however, obtained an extension of time to appeal to the district court based on
excusable neglect. Fed. R. Bankr. P. 9006(b)(1). Wells Fargo did not persuade
the district court to dismiss the appeal, but the court ruled in the bank’s favor,
authorizing judicial foreclosure of the lien while remanding Wells Fargo’s
claim for attorneys’ fees back to the district court. 1 Erickson has appealed on
the merits, while Wells Fargo seeks closure by defending the judgment even as
it challenges the jurisdiction of the bankruptcy court to extend time for an
appeal and the timeliness of the appeal from the district court to this court.
Finding no error or lack of jurisdiction under the peculiar procedural
occurrences here, we AFFIRM.

       * Pursuant to 5TH CIR. R. 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
CIR. R. 47.5.4.
       The partial remand does not interfere with the finality of the district court’s
       1

judgment for our purposes. In re Pratt, 524 F.3d 580, 585 (5th Cir. 2008).
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     Case: 13-50089     Document: 00512612047     Page: 3   Date Filed: 04/29/2014

                                  No. 13-50089
          1. Extension of Time to Appeal from the Bankruptcy Court
             Judgment

          When appealing the judgment of a bankruptcy court, notice of appeal
must be filed within fourteen days of the judgment being entered. Fed. R.
Bankr. P. 8002(a). A bankruptcy court may permit notice of appeal to be filed
after the fourteen days have passed if the appellant’s failure to file on time
“was the result of excusable neglect,” Fed. R. Bankr. P. 9006(b)(1), unless the
judgment being appealed grants relief from an automatic stay, in which case
the bankruptcy court may not extend the time for filing. Fed. R. Bankr.
P. 8002(c)(1)(A).    Relying on the “relief from an automatic stay” exception to
Rule 9006, Wells Fargo contends that the bankruptcy court abused its
discretion in allowing Erickson to file his notice of appeal two months after the
bankruptcy court issued its judgment because the judgment declared, inter
alia, that the automatic stay triggered by Erickson’s filing for bankruptcy was
lifted.     Although we agree with the district court’s conclusion that the
bankruptcy court did not abuse its discretion in extending the time for
Erickson to file his notice of appeal, we do so for reasons other than those relied
upon by the district court.
          Shortly after filing for Chapter 7 bankruptcy, Erickson submitted a
schedule of exempt property, claiming property located in Westlake Hills in
Austin, Texas, to be exempt under the Texas homestead exemption laws.
Erickson had used the Westlake Hills property to secure a $931,000.00 home
equity loan for which Wells Fargo held the note. Wells Fargo did not object to
the property’s inclusion in the schedule. Consequently, the bankruptcy court
lost jurisdiction over the Westlake Hills property early in the bankruptcy case,
and from that point forward no automatic stay hindered Wells Fargo’s pursuit
of foreclosure. Because the bankruptcy court’s final judgment was ineffective
in “lifting” the stay, Rule 8002(c)(1)(A) does not apply.              Given the
                                        3
     Case: 13-50089       Document: 00512612047          Page: 4     Date Filed: 04/29/2014

                                       No. 13-50089
circumstances as they actually existed, the bankruptcy court did not abuse its
discretion in allowing a short extension of time for Erickson to file a notice of
appeal. 2
       2. Timeliness of Appeal from the District Court
       Ever keen to exploit technical errors, Erickson delayed filing his appeal
to this court until 127 days after the district court ruled adversely to him on
September 24, 2012. Unfortunately for Wells Fargo, this filing was timely
pursuant to Federal Rule of Civil Procedure 58, Federal Rule of Appellate
Procedure 4(a)(7), and even Federal Rule of Bankruptcy Procedure 7058
because the district court did not enter judgment on a separate document. In
such circumstances, these rules authorize filing a notice of appeal up to 150
days after the final “order” entered without a separate document. The appeal
is timely.
       3. Merits
       Erickson raises only two issues to this court that have been properly
preserved in the courts below. 3 The Texas Constitution requires a home-equity
loan to be secured “by a lien that may be foreclosed upon only by a court order.”
Tex. Const. art. XVI, § 50(a)(6)(D). Erickson argues that the deed of trust
securing the home equity loan at issue in this case prohibits the Trustee from
pursuing judicial foreclosure, hence the loan is constitutionally invalid.
However, as the district court found, the plain language of the deed states only

       2 If the bankruptcy court thought it had discretion to grant this relief under 11 U.S.C.
§ 105 in the face of an effective order lifting the automatic stay, and thus to abridge Federal
Rules of Bankruptcy Procedure 8002 and 9006 expressly to the contrary, it was wrong. See
In the Matter of Smith, 21 F.3d 660, 666 (5th Cir. 1994).

       3Erickson’s contention that the deed of trust securing his home equity loan imposed
personal liability on him contrary to the Texas Constitution is not preserved here because
the bankruptcy court found it untimely raised and did not rule on the issue. In re McCombs,
659 F.3d 503, 510 (5th Cir. 2011).
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                                  No. 13-50089
that the Trustee or a substitute trustee cannot act on behalf of the borrower in
a judicial proceeding, not that a Trustee cannot enter into a judicial proceeding
on its own behalf, such as filing suit to initiate a judicial foreclosure. Thus the
disputed provision of the home equity loan does not violate Section 50(a)(6)(D)
of Texas’s constitution.
      Erickson further argues that a lender’s right to judicially foreclose on a
lien depends on a contractual provision in a deed of trust providing as much.
Because the deed of trust at issue here does not include such a provision,
Erickson insists that the district court erred by permitting Wells Fargo to
initiate judicial foreclosure. Both this court and the Texas Courts of Appeals
have held that judicial foreclosure and the ability of a trustee to foreclose under
the power of sale in a deed of trust are separate and distinct remedies, either
of which the trustee may elect to pursue. See, e.g., Thurman v. Fed. Deposit
Ins. Corp., 889 F.2d 1441, 1445 (5th Cir. 1989); Kaspar v. Keller, 466 S.W.2d
326, 328 (Tex. Civ. App.—Waco 1971); Am. Nat. Ins. Co. v. Schenck, 85 S.W.2d
833, 839 (Tex. Civ. App.—Amarillo 1935). The district court did not err when
it held that Wells Fargo had a right to pursue judicial foreclosure as a remedy
independent of its contractual right to pursue non-judicial foreclosure under
the power of sale in the deed of trust.
      The judgment of the district court is AFFIRMED.

                                          5
    Case: 13-50089     Document: 00512612047     Page: 6   Date Filed: 04/29/2014

                                     No. 13-50089
GRAVES, Circuit Judge, concurring in the judgment only:
      I agree to affirm the judgment of the district court because I agree that
Erickson’s home loan was valid under the Texas Constitution and that Wells
Fargo may pursue a judicial foreclosure on the property securing the loan. As
the majority opinion explains, the plain language of Erickson’s deed of trust
does not prohibit the Trustee from filing suit to initiate a judicial foreclosure.
Therefore, the terms of the loan do not violate the Texas constitutional
requirement that a home-equity loan be “secured by a lien that may be
foreclosed upon only by a court order.” TEX. CONST. art. XVI, § 50(a)(6)(D).
Erickson’s argument that Wells Fargo may not pursue a judicial foreclosure
absent a contractual provision allowing Wells Fargo to do so is also unavailing.
While the right to pursue foreclosure under the power of sale in a deed of trust
is most certainly a right that arises from the parties’ contract, judicial
foreclosure is a remedy independent of that contract. As such, the district court
did not err when it held that Wells Fargo had a right to seek the remedy of
judicial foreclosure when Erickson defaulted on the August 9, 2002 loan.
      I also agree that the Bankruptcy Court properly granted Erickson an
extension of time to appeal the bankruptcy court’s judgment but for reasons
different from those set out in the majority opinion. As the district court
explained, the automatic stay that was triggered when Erickson filed for
Chapter 7 bankruptcy was lifted when he was discharged from bankruptcy on
February 9, 2010. Therefore, the bankruptcy court’s April 28, 2011 order in
the related adversary proceeding between Erickson and Wells Fargo could not
have lifted an automatic stay from Erickson’s Chapter 7 case, since the
automatic stay ended when that case was closed.
            For these reasons, I affirm.