Court Opinion

ID: 9407700
Source: CourtListenerOpinion
Date Created: 2023-07-08 00:01:12.118906+00
Date Added: 2024-06-11T17:20:39.711603
License: Public Domain

Case: 22-20138         Document: 00516813708             Page: 1      Date Filed: 07/07/2023

              United States Court of Appeals
                   for the Fifth Circuit                                          United States Court of Appeals
                                                                                           Fifth Circuit
                                      ____________                                       FILED
                                                                                       July 7, 2023
                                       No. 22-20138
                                                                                      Lyle W. Cayce
                                      ____________
                                                                                           Clerk

   Linda Moore; Thomas Moore, Jr.,

                                                                   Plaintiffs—Appellants,

                                             versus

   Wells Fargo Bank, National Association, as trustee for
   MASTR Asset Backed Securities Trust 2004-OPT2,
   Mortgage Pass-Through Certificates; PHH Mortgage
   Corporation,

                                               Defendants—Appellees.
                      ______________________________

                      Appeal from the United States District Court
                          for the Southern District of Texas
                               USDC No. 4:20-CV-3299
                      ______________________________

   Before Graves, Ho, and Duncan, Circuit Judges.
   Per Curiam: *
          Texas law imposes a four-year limitations period on real property
   liens. Tex. Civ. Prac. & Rem. Code § 16.035. Where a note or deed
   of trust secured by a real property lien contains an optional acceleration
   clause, the lender must bring a foreclosure suit within four years of exercising

          _____________________
          *
              This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 22-20138      Document: 00516813708          Page: 2    Date Filed: 07/07/2023

                                    No. 22-20138

   its right to accelerate. See Holy Cross Church of God in Christ v. Wolf, 44
   S.W.3d 562, 566–67 (Tex. 2001).            The lender can also rescind the
   acceleration before the limitations period expires, which restores the deed to
   its original condition “as if no acceleration had occurred.” Tex. Civ.
   Prac. & Rem. Code § 16.038(a). The lender may then accelerate the
   maturity date of the loan again in the future. See id. § 16.038(d).
          But what happens if a lender tries to simultaneously rescind a prior
   acceleration and re-accelerate? Is that valid? If not, are both the rescission
   and the re-acceleration void? Or just the re-acceleration? Section 16.038
   does not say.
          We believe this dispute presents pure questions of law that “should
   be answered by the only court that can issue a precedential ruling that will
   benefit all future litigants, whether in state or federal court.” JCB, Inc. v.
   Horsburgh & Scott Co., 912 F.3d 238, 239 (5th Cir. 2018). Accordingly, we
   certify two questions to the Supreme Court of Texas.
                                         I.
          On May 27, 2004, Plaintiffs Linda Moore and Thomas Moore
   obtained a $170,700 loan—secured by their property in Sugar Land, Texas—
   from Option One Mortgage Corporation. Option One assigned the loan to
   Wells Fargo. PHH Mortgage Corporation services the loan. The deed of
   trust that memorialized this transaction contained an optional acceleration
   clause, which gave Wells Fargo and PHH (the “Lenders”) the right to
   demand full repayment of the loan if the Moores fell behind in their monthly
   payments.
          The Moores indeed fell behind on their monthly payments. They
   agreed to a loan workout plan with Wells Fargo, but they again fell behind.
   This led to a Loan Modification Agreement. The Moores still failed to make
   their payments. So PHH sent them a notice of default in October 2015,

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                                      No. 22-20138

   requesting a delinquent amount of $6,988.05. This letter also expressed the
   Lenders’ intent to accelerate the loan. On February 2, 2016, the Lenders sent
   the Moores a notice of acceleration. The parties agree that the four-year
   limitations period to foreclose under § 16.035 began to accrue on this date.
          After sending the initial notice of acceleration, the Lenders sent
   similar notices on October 6, 2016, November 2, 2016, January 13, 2017,
   March 8, 2017, and March 5, 2019. Each notice included language expressly
   rescinding prior acceleration notices: “The Servicer hereby rescinds all prior
   acceleration notices.”       And each notice purported to re-accelerate the
   maturity date of the loan.
          On August 12, 2020, the Moores filed suit in state court for a
   declaratory judgment that the four-year limitations period had run on Wells
   Fargo’s ability to foreclose. The Lenders removed to federal court and
   moved for summary judgment, which the district court granted. The district
   court held that the Lenders had abandoned their February 2016 acceleration
   of the loan by sending multiple notices requesting less than the full balance
   of the loan, and that they otherwise rescinded the acceleration under §
   16.038.
                                          II.
          The parties disagree on whether the Lenders timely rescinded the
   February 2016 acceleration.
          A lienholder can rescind a prior acceleration by sending a “written
   notice” of rescission to the borrower’s “last known address” by “first class
   or certified mail.” Tex. Civ. Prac. & Rem. Code § 16.038(b)–(c).
   Rescission “does not affect a lienholder’s right to accelerate the maturity
   date of the debt in the future nor does it waive past defaults.” Id. § 16.038(d).

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                                      No. 22-20138

           The Lenders argue that they satisfied § 16.038’s requirements for
   rescission by sending multiple written notices of rescission to the Moores.
   The Moores argue that § 16.038 doesn’t apply because the Lenders
   impermissibly attempted to simultaneously rescind the acceleration and re-
   accelerate the loan.
           The Moores point to a holding from this court that “re-notice is
   required after acceleration is rescinded.” Wilmington Trust v. Rob, 891 F.3d
   174, 177 (5th Cir. 2018). As with initial acceleration, re-acceleration requires
   first a notice of intent to accelerate, followed by a notice of acceleration. See
   id. at 176–77. Thus, the Moores argue, a lender can’t rescind and re-
   accelerate simultaneously because Texas law “imposes notice requirements
   before acceleration.” Id. at 176 (emphasis added).
           But Wilmington Trust—which was not a statute of limitations case—
   does not control. It only concerned re-acceleration, not rescission. This
   case, by contrast, is about whether the Lenders properly and timely rescinded
   their initial acceleration, since that would have reset the applicable
   limitations period. So although the Lenders’ re-acceleration of the loan is
   likely void under Wilmington Trust—since simultaneous rescission and re-
   acceleration by definition lacks a re-notice of intent to accelerate—that case
   doesn’t tell us whether the Lenders’ rescission of the initial acceleration is also
   void.
           But even so, Wilmington Trust casts into doubt whether the Lenders
   effectively rescinded. There’s no way to tell if the Lenders intended to
   rescind the initial acceleration without being able to also re-accelerate at the
   same time. Arguably, rescission was merely a necessary antecedent to the
   Lenders’ primary goal of re-acceleration.
           By contrast, a Texas intermediate appellate court recently blessed
   simultaneous rescission and re-acceleration. See PHH Mortgage Corp. v.

                                           4
Case: 22-20138      Document: 00516813708           Page: 5    Date Filed: 07/07/2023

                                     No. 22-20138

   Aston, No. 01-21-00057-CV, 2022 WL 3363196 (Tex. App.—Houston [1st
   Dist.] Aug. 16, 2022, pet. denied). And it addressed and rejected the same
   arguments that the Moores presented to this court. See id. at *4–5.
          So under Aston, the Lenders properly rescinded and re-accelerated.
   But under Wilmington Trust, the Lenders could not have re-accelerated and
   arguably did not rescind the initial acceleration.
          Certification is advisable here. As the Aston court acknowledged,
   “Section 16.038 is silent as to whether any time must pass between a
   rescission and a re-acceleration.” 2022 WL 3363196, at *4. And the parties
   do not point to any meaningful authority besides Aston and Wilmington Trust.
                                         III.
          We hereby certify the following questions of law to the Supreme Court
   of Texas:
          (1) May a lender simultaneously rescind a prior acceleration
          and re-accelerate a loan under Tex. Civ. Prac. & Rem.
          Code § 16.038?
          (2)    If a lender cannot simultaneously rescind a prior
          acceleration and re-accelerate a loan, does such an attempt void
          only the re-acceleration, or both the re-acceleration and the
          rescission?
          We disclaim any intention or desire that the Supreme Court of Texas
   confine its reply to the precise form or scope of the question certified.

                                                        A True Copy
                                                        Certified Jul 07, 2023

                                          5
                                                        Clerk, U.S. Court of Appeals, Fifth Circuit