John Porterfield v. JP Morgan Chase, N.A. , 682 F. App'x 287 ( 2017 )

Case: 16-50215 Document: 00513915150 Page: 1 Date Filed: 03/16/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-50215 FILED
Summary Calendar March 16, 2017
Lyle W. Cayce
Clerk
JOHN PORTERFIELD; ANITA PORTERFIELD,
Plaintiffs–Appellants,
v.
JP MORGAN CHASE, N.A.; DEUTSCHE BANK NATIONAL TRUST
COMPANY,
Defendants–Appellees.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 5:12-CV-815
Before HIGGINBOTHAM, PRADO, and HAYNES, Circuit Judges.
PER CURIAM:*
John and Anita Porterfield (“the Porterfields”) appeal the district court’s
grant of summary judgment in favor of JP Morgan Chase, N.A. and Deutsche
Bank National Trust Company (collectively, “the Defendants”), and allege
nonjudicial foreclosure on their property was time-barred by the applicable
Texas statute of limitations. 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
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No. 16-50215
I. FACTUAL BACKGROUND
The underlying controversy in this case arises from a nonjudicial
foreclosure on a piece of property located at 2 Walnut Grove Road in Boerne,
Texas (“the Property”). On November 30, 2005, Jon Galland purchased the
Property using a loan from Long Beach Mortgage Company. Galland executed
a promissory note with a principal balance of $240,000 secured by a lien on the
Property. Thereafter, the loan was assigned to Deutsche Bank National Trust
Company (“DBNTC”), and Washington Mutual Bank (“WaMu”) served as the
mortgage servicer. Sometime later, JP Morgan Chase purchased WaMu’s
assets.
On March 9, 2006, the Porterfields executed a contract for deed
purporting to purchase the Property from Galland. The loan was not paid off
as part of the sale, and WaMu stopped receiving payments sometime in 2006.
The Porterfields then sued Galland over the contract for deed, and on April 19,
2007, an agreed judgment was signed transferring ownership of the Property
to the Porterfields. On August 14, 2007, a notice of acceleration and foreclosure
was sent to Galland.
To prevent foreclosure, the Porterfields applied for a temporary
restraining order (“TRO”), which was granted sometime in September 2007
(“the First Lawsuit”). The TRO enjoined foreclosure on the deed of trust from
September 28, 2007, to October 25, 2007. John Galland then died on or about
June 3, 2008.
In September 2011, the Porterfields and DBNTC entered mediation
regarding the First Lawsuit and executed a Mediated Settlement Agreement
(“MSA”). Pursuant to the MSA, the Porterfields agreed to pay DBNTC
$120,000 “in full satisfaction and release of the lien held by” DBNTC. If the
Porterfields paid this amount by December 31, 2011, DBNTC agreed to release
the lien. But if the Porterfields failed to pay by the agreed-upon date, DBNTC
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would be permitted to pursue foreclosure, and the Porterfields agreed to “not
oppose, contest or in any way delay or thwart the foreclosure.” The Porterfields
apparently did not meet the deadline set in the MSA, and on July 16, 2012, a
second notice of acceleration and foreclosure was sent to Galland at the
Property. The Property was ultimately sold to DBNTC at a foreclosure sale
held on August 7, 2012, for $204,879.40.
The Porterfields filed suit challenging the foreclosure sale (“the Second
Lawsuit”) against the Defendants on August 20, 2012. 1 Among other things,
the Porterfields argued that the foreclosure sale was barred because the
statute of limitations had passed. DBNTC filed counterclaims against the
Porterfields, and the parties filed competing motions for summary judgment.
The district court denied the Porterfields’ partial motion for summary
judgment and granted summary judgment in favor of the Defendants.
As relevant to this appeal, the district court denied the Porterfields’
motion for summary judgment on their wrongful foreclosure claim based on
their argument that the statute of limitations for nonjudicial foreclosure had
passed before the Defendants foreclosed on the Property. The Porterfields
argued that more than four years had elapsed between the first notice of
acceleration and the foreclosure sale. The Defendants argued, and the district
court agreed, however, that the statute of limitations had been tolled for one
year following Galland’s death pursuant to Texas Civil Practice and Remedies
Code § 16.062. Accordingly, foreclosure was not time-barred when the Property
was sold.
On appeal, the Porterfields only contest the district court’s application of
the § 16.062 one-year tolling provision.
The Porterfields initially filed suit in state court in Kendall County, Texas, but the
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Defendants properly removed the suit to federal court on the basis of diversity jurisdiction.
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II. DISCUSSION
The district court had jurisdiction in this case pursuant to 28 U.S.C.
§ 1332, and this Court has appellate jurisdiction under 28 U.S.C. § 1291.
“This court reviews a district court’s grant of summary judgment de
novo, applying the same standards as the district court.” Johnson v. World All.
Fin. Corp., 830 F.3d 192, 195 (5th Cir. 2016). On appeal, this Court can affirm
the district court’s grant of summary judgment “on any legally sufficient
ground, even one not relied upon by the district court.” BMG Music v. Martinez,
74 F.3d 87, 89 (5th Cir. 1996). Summary judgment is appropriate where “there
is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56. “A genuine dispute of material
fact exists ‘if the evidence is such that a reasonable jury could return a verdict
for the nonmoving party.’” Johnson, 830 F.3d at 195 (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
Texas Civil Practice and Remedies Code § 16.035 sets out the statute of
limitations for a cause of action arising out of a lien on real property. The
portions of the statute relevant to this case provide the following:
(a) A person must bring suit for the recovery of real property under
a real property lien or the foreclosure of a real property lien not
later than four years after the day the cause of action accrues.
(b) A sale of real property under a power of sale in a mortgage or
deed of trust that creates a real property lien must be made not
later than four years after the day the cause of action accrues.
Tex. Civ. Prac. & Rem. Code Ann. § 16.035(a)–(b). 2 Section 16.035(b) controls
here because the Defendants pursued nonjudicial foreclosure pursuant to a
2 The parties dispute what, if any, impact § 16.035(c) has in this case. Given the plain
meaning of this provision, it has no bearing on the outcome here. The statute provides that
“[t]he running of the statute of limitations is not suspended against a bona fide purchaser for
value . . . who has no notice or knowledge of the suspension of the limitations period and who
acquires an interest in the property when a cause of action on an outstanding real property
lien has accrued for more than four years, except as provided by . . . Section 16.062.” Tex.
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deed of trust creating the lien. Accordingly, absent any reason to toll the
limitations period, the Defendants had four years from the time the maturity
of the loan was accelerated to complete nonjudicial foreclosure of the Property.
See Boren v. U.S. Nat’l Bank Ass’n, 807 F.3d 99, 104 (5th Cir. 2015); Holy Cross
Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001). The
limitations period begins to run when the holder of a note or deed of trust sends
“both a notice of intent to accelerate and a notice of acceleration”—here, on
August 14, 2007. Boren, 807 F.3d at 104 (quoting EMC Mortg. Corp. v. Window
Box Ass’n, Inc., 264 S.W.3d 331, 335–36 (Tex. App.—Waco 2008, no pet.)).
Under § 16.062, “[t]he death of a person against whom or in whose favor
there may be a cause of action suspends the running of an applicable statute
of limitations for 12 months after the death.” Tex. Civil Prac. & Rem. Code
Ann. § 16.062(a). Moreover, “[i]t is a general and long-established principle in
Texas that a mortgage is a mere incident of the debt.” Davidson, 44 F.3d at
253. “Consistent with this principle, Texas law matches the limitations period
of the mortgage to that of the note.” Id. at 254. Thus, “the limitation available
to a purchaser of property incumbered [sic] by a lien to secure a debt of his
vendor is that which applies in favor of the debtor against the creditor.” Brown
v. Cates, 87 S.W. 1149, 1151 (Tex. 1905). “[S]o long as the creditor’s cause of
action against the debtor upon the debt is not barred, the right to foreclose
against the purchaser of the property continues.” Id.
Civil Prac. & Rem. Code Ann. § 16.035(c) (emphasis added). As we have long recognized, this
provision functions to “protect from secret tollings or extensions the unknowing bona fide
purchaser who acquires the land when the limitations period on the debt has facially
expired.” Davidson v. FDIC, 44 F.3d 246, 254 (5th Cir. 1995). Because the Porterfields
acquired the property, at the latest, on April 19, 2007, before either notice of acceleration was
sent, the limitations period had not facially expired. Thus, § 16.035(c) would not have
prevented suspension of the limitations period if such a suspension were applicable.
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The Porterfields admit that the Defendants could have sued Galland’s
estate on the promissory note at the time nonjudicial foreclosure was initiated
on the Property. Because the Defendants could have brought suit at the time
of Galland’s death, the statute of limitations on the note would have been tolled
for one year following his death under § 16.062. And given that Texas courts
seek to “harmonize” the limitations periods for foreclosure actions and suits on
the underlying debt, the one-year tolling of the limitations period for the note
likewise served to toll the limitations period for the nonjudicial foreclosure. See
Davidson, 44 F.3d at 254.
The limitations period here ran four years from August 14, 2007, but was
tolled for at least one year because of Galland’s death. Thus, the limitations
period for nonjudicial foreclosure, at the earliest, would not have expired until
August 14, 2012. 3 Because the Defendants foreclosed on the Property before
that date, foreclosure was proper and the district court correctly granted
summary judgment in favor of the defendants on this issue.
III. CONCLUSION
For the foregoing reasons, we AFFIRM.
3 The Defendants also argue that the statute of limitations would have been
suspended from September 28, 2007, to October 25, 2007, during the pendency of the TRO in
the First Lawsuit. See Landers v. Nationstar Mortg., LLC, 461 S.W.3d 923, 926–27 (Tex.
App.—Tyler 2015, pet. denied). Because the foreclosure sale was completed within the
limitations period regardless of this potential 27-day suspension, we do not determine
whether limitations would have been tolled during the TRO.
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