Court Opinion

ID: 4702896
Source: CourtListenerOpinion
Date Created: 2021-07-12 18:00:43.91418+00
Date Added: 2024-06-11T08:06:27.489935
License: Public Domain

Case: 20-40534     Document: 00515933324         Page: 1     Date Filed: 07/12/2021

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

                                                                           FILED
                                                                       July 12, 2021
                                  No. 20-40534                        Lyle W. Cayce
                                                                           Clerk

   Deutsche Bank National Trust Company as Trustee for
   Soundview Home Loan Trust 2006-Eql Asset-Backed
   Certificates, Series 2006-Eql,

                                                             Plaintiff—Appellee,

                                       versus

   Gloria Castrellon,

                                                         Defendant—Appellant.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                            USDC No. 7:19-CV-150

   Before Higginbotham, Jones, and Costa, Circuit Judges.
   Per Curiam:*
          On June 30, 2006, Gloria Castrellon’s then-husband, Jesus
   Castrellon, executed a Texas Home Equity Note (“Note”) secured by the
   couple’s home. Although Ms. Castrellon did not sign the Note, she joined

          *
            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   opinion should not be published and is not precedent except under the limited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.
Case: 20-40534         Document: 00515933324               Page: 2   Date Filed: 07/12/2021

                                         No. 20-40534

   her husband that same day in executing a security instrument that secured
   payment of the Note with a lien on the couple’s home. 1
          Around July 2012, the Castrellons stopped making payments on the
   Note. The bank’s loan servicer notified the Castrellons on October 17, 2012,
   that the loan had been accelerated. By December 2013 they had missed 18
   payments. On December 27, 2013, after various notifications from the
   parties in interest, Deutsche Bank (the Bank)—which had been assigned the
   security instrument and the Note in 2009—filed a Home Equity Foreclosure
   Application pursuant to Texas Rule of Civil Procedure 736. The Bank was
   granted a final order that allowed it to proceed with foreclosure on
   November 5, 2014.
          In a bid to stop the sale, Ms. Castrellon sued the Bank on January 5,
   2015, which automatically stayed the sale pursuant to Texas Rule of Civil
   Procedure 736.11(a). After the suit was removed to the Southern District of
   Texas, the parties reached a settlement and modification agreement that
   included a $3,990.55 immediate “down payment” from Ms. Castrellon,
   which then was applied to the loan.
          Shortly thereafter, Deutsche Bank claimed that the settlement was
   void, because Mr. Castrellon, not Ms. Castrellon, was the actual and sole
   obligor on the Note, and it contended the proposed modification was
   therefore not possible. Castrellon v. Ocwen Loan Servicing, L.L.C., 721 Fed.
   Appx. 346 (5th Cir. 2018).            Ms. Castrellon attempted to enforce the
   agreement and litigation ensued. A panel of this circuit remanded for further
   proceedings; and back in the district court, the parties ultimately agreed to a
   dismissal without prejudice, July 12, 2018.

          1
              The Castrellons divorced sometime in 2015.

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                                    No. 20-40534

          The loan servicer resumed sending monthly notices to Mr. Castrellon
   that payments were due. In March of 2019, Mr. Castrellon was served with
   Notice of Default and Intent to Accelerate. The Castrellons were given thirty
   days to pay $303,379.36 or face acceleration.
          On April 19, 2019, Deutsche Bank filed its Original Complaint seeking
   an order for non-judicial foreclosure pursuant to the terms of the loan
   agreement and Texas Property Code Section 51.002, and in the alternative
   judicial foreclosure. The parties cross-filed for summary judgement. The
   district court entered default judgment against Mr. Castrellon, partial
   summary judgment against Ms. Castrellon, and a final order dismissing all
   other claims on July 15, 2020. Only Ms. Castrellon has appealed.
          We review the grant of summary judgement de novo. In re CPDC, Inc.,
   337 F.3d 436, 441 (5th Cir. 2003).
          Under Texas law, “a secured lender “must bring suit for . . . the
   foreclosure of a real property lien not later than four years after the day the
   cause of action accrues.” Boren v. U.S. Nat’l Bank Ass’n, 807 F.3d 99, 104
   (5th Cir. 2015) (citing TEX. CIV. PRAC. & REM. CODE § 16.035(a)). Where,
   as here, there is an option to accelerate, “the action accrues ‘when the holder
   actually exercises its option to accelerate.’” Id. (citing Holy Cross Church of
   God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001)). However, under
   Texas common law, “[w]here a person is prevented from exercising his legal
   remedy by the pendency of legal proceedings, the time during which he is
   thus prevented should not be counted against him in determining whether
   limitations have barred his right.” Hughes v. Mahaney & Higgins, 821 S.W.2d
   154, 157 (Tex. 1991) (internal quotations omitted).
          On appeal, Ms. Castrellon argues that the district court was wrong to
   grant partial summary judgment to the Bank, as she contends its April 2019
   complaint seeking non-judicial foreclosure is time barred.

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                                     No. 20-40534

          The Bank’s primary argument is that it abandoned its original
   acceleration by entering into a settlement agreement, accepting a down
   payment from Ms. Castrellon, and foregoing remedies it had a legal right to
   pursue. The district court was not persuaded, noting the conflicting facts on
   the question of abandonment. Instead, the district court accepted Deutsche
   Bank’s secondary theory—that Ms. Castrellon’s separate suit tolled the
   statute of limitations as to the Bank’s foreclosure effort. It is on this narrow
   basis that we affirm.
          Deutsche Bank was in the process of foreclosing in 2015 when
   Ms. Castrellon filed a suit pursuant to Texas Rule of Civil Procedure
   736.11(a), thus triggering the automatic stay under that rule. This litigation
   course effectively blocked the Bank from exercising foreclosure for the
   duration of that dispute. See TEX. R. CIV. P. 736.11(d) (“If the automatic stay
   under this rule is in effect, any foreclosure sale of the property is void.”).
   Therefore, Ms. Castrellon’s successful check on Deutsche Bank’s ability to
   proceed also tolled the statute of limitations.
          Deutsche Bank’s action accrued at the earliest on October 17, 2012,
   when it accelerated the loan. The statute of limitations was tolled from
   January 5, 2015, when Ms. Castrellon filed her separate suit to block
   foreclosure, to July 12, 2018, when the parties agreed to a dismissal without
   prejudice. The more than three years’ pendency of that suit postponed to
   April 23, 2020, the date the statute of limitations would have expired.
   Because Deutsche Bank filed the instant suit to foreclose on April 19, 2019,

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                                         No. 20-40534

   after having noticed acceleration several months earlier, its claim for non-
   judicial foreclosure was timely. 2
           For the foregoing reasons, the judgment of the district court is
   AFFIRMED.

           2
             The court additionally held that, “Ms. Castrellon’s maintenance of the 2015
   action did not prevent [the Bank] from seeking judicial foreclosure, and tolling cannot
   render this claim timely.” In light of the above discussion, we do not address this holding.

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