mark-e-biedryck-v-us-bank-national-association-as-trustee-for-credit ( 2015 )

Opinion issued May 12, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-14-00017-CV
———————————
MARK E. BIEDRYCK, Appellant
V.
U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR CREDIT
SUISSE, FIRST BOSTON MORTGAGE SECURITIES CORP., HOME
EQUITY PASS-THROUGH CERTIFICATES, SERIES 2005-6, Appellee
On Appeal from the 129th District Court
Harris County, Texas
Trial Court Case No. 2013-01631
MEMORANDUM OPINION
Appellant, Mark E. Biedryck, challenges the district court’s rendition of
summary judgment in favor of appellee, U.S. Bank National Association, as
Trustee for Credit Suisse, First Boston Mortgage Securities Corp., Home Equity
Pass-Through Certificates, Series 2005-6 (“U.S. Bank”), in Biedryck’s declaratory-
judgment action against U.S. Bank. In two issues, Biedryck contends that the
district court erred in granting U.S. Bank summary judgment.
We affirm.
Background
In his petition, Biedryck alleged that in 2005, he obtained a home equity
loan from U.S. Bank against his real property located at 7400 Bellerive in Houston
(the “property”). He later defaulted on the note, and, in August 2007, U.S. Bank
filed an “Application for Home Equity Foreclosure Order,” (“application for
foreclosure”), 1 which it later dismissed. In December 2007, U.S. Bank filed a
second application for foreclosure, asserting that Biedryck had “failed to remit the
monthly payment [that] became due in March 2007, and every monthly installment
[that had] become due since that date.” And, as of December 10, 2007, the loan
was “10 monthly payments in arrears.” Although the district court granted the
second application on April 1, 2008,2 U.S. Bank did not foreclose on the property.
1
See TEX. R. CIV. P. 736 (providing for expedited order allowing foreclosure on
certain liens).
2
Biedryck asserted in his petition that the district court granted the application on
“August 1, 2008,” citing “Plaintiff’s Exhibit 1,” which he attached to his petition.
However, Exhibit 1 reflects that the district court signed the order on April 1,
2008.
2
In January 2009, U.S. Bank filed a third application for foreclosure,
asserting that Biedryck had “failed to remit the monthly payment [that] became
due in July 2007, and every monthly installment [that had] become due since that
date.” And, as of December 18, 2008, the loan was “18 monthly payments in
arrears.” Again, although the district court granted the third application, U.S. Bank
did not foreclose.
In August 2010, U.S. Bank filed a fourth application for foreclosure,
asserting that Biedryck had “failed to remit the monthly payment [that] became
due in May 2008, and every monthly installment [that had] become due since that
date.” And, as of July 28, 2010, the loan was “27 monthly payments in arrears.”
However, the district court dismissed the fourth application.
Finally, on September 20, 2012, U.S. Bank filed a fifth application for
foreclosure. After Biedryck filed the instant declaratory-judgment action, the
district court dismissed U.S. Bank’s application.3
Asserting that U.S. Bank’s “cause of action on the defaulted [n]ote accrued
when the March 2007 payment became overdue” and the “default has never been
cured,” Biedryck sought a declaration that U.S. Bank’s “lien and power of sale
3
See TEX. R. CIV. P. 736.11(a), (c) (requiring dismissal of application if respondent
files original proceeding contesting right to foreclose); Huston v. U.S. Bank Nat.
Ass’n, 359 S.W.3d 679, 683 (Tex. App.—Houston [1st Dist.] 2011, no
pet.) (holding counterclaim for declaratory relief not allowed in rule 736
foreclosure proceeding; however, separate lawsuit to contest right to foreclose
allowed).
3
have expired as a matter of law.” He argued that because a four-year statute of
limitations applies,4 U.S. Bank’s “lien and power of sale” expired in March 2011.
He further asserted that U.S. Bank’s September 20, 2012 application for
foreclosure was filed after the expiration of the limitations period.
U.S. Bank answered, generally denying Biedryck’s allegations and arguing
that his declaratory-judgment action is barred because it had abandoned its
acceleration of the note. In its summary-judgment motion, U.S. Bank argued that
it is entitled to judgment as a matter of law because the “limitations period has not
run.” It asserted that in 2005, Biedryck executed a promissory note and deed of
trust 5 to obtain a home equity loan in the amount of $50,800 against the property;
in 2006, Biedryck defaulted on his payments; and, in November 2007, it sent him a
“Notice of Default and Intent to Accelerate.” U.S. Bank further asserted that
“[a]ssuming [Biedryck’s] allegations are true, [it] subsequently accelerated the
maturity of the debt in December 2007.” However, in February, March, and April
2008, it accepted payments from Biedryck in the amounts of $1,413.00, $718.93,
and $718.93, respectively.
In September 2008, after Biedryck had once again defaulted, U.S. Bank
again sent him a Notice of Default and Intent to Accelerate. And on December 17,
4
See TEX. CIV. PRAC. & REM. CODE ANN. § 16.035 (Vernon 2002).
5
The promissory note and deed of trust were originally made payable to Argent
Mortgage Company, LLC. On March 6, 2007, Argent assigned the note and deed
of trust to U.S. Bank. Argent is not a party to this appeal.
4
2008, it accelerated the maturity of the debt and sent Biedryck a “Notice of
Acceleration.” On May 20, 2009, however, “[i]n an attempt to assist [Biedryck] to
bring his loan back up to date,” U.S. Bank and Biedryck entered into a “Special
Forbearance Agreement” (“SFA”), “whereby the parties agreed to a revised
payment schedule in order to catch [Biedryck] up on his delinquent payments.”
And U.S. Bank, in accordance with the SFA, then accepted a payment from
Biedryck in May 2009 in the amount of $700.00. It also accepted payments in the
amount of $747.28 each month from June through August 2009. On December 5,
2009, the parties entered into a “Loan Modification Agreement” (“LMA”),
pursuant to which U.S. Bank capitalized past-due amounts and lowered Biedryck’s
payments and interest rate. Biedryck promised to make monthly payments of
$308.82 beginning January 2010.
In January 2010, after Biedryck had not remitted payment in accordance
with the LMA, U.S. Bank and Biedryck entered into a second SFA, again
rearranging his payment plan. U.S. Bank then accepted payments from him from
February through April 2010.
After April 2010, however, Biedryck again stopped making payments, and
in June 2010, U.S. Bank again sent him a Notice of Default and Intent to
Accelerate. In July 2010, it accelerated the maturity of the debt and sent Bierdryck
a Notice of Acceleration. In August 2010, however, U.S. Bank and Biedryck
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entered into a third SFA, “whereby the parties agreed to a revised payment
schedule in order to catch [Biedryck] up on his delinquent payments.” U.S. Bank
then accepted payments from Biedryck from August 2010 through March 2011.
After March 2011, however, Biedryck again stopped making payments, and
on July 6, 2012, U.S. Bank again sent him a Notice of Default and Intent to
Accelerate. On August 7, 2012, it accelerated the maturity of the debt and sent
Biedryck a Notice of Acceleration. And on September 20, 2012, U.S. Bank filed
an application for foreclosure.6 Biedryck then filed the instant action. 7
U.S. Bank further asserted in its summary-judgment motion that its 2012
“foreclosure cause of action . . . accrued on August 7, 2012, the date that [it]
accelerated the maturity of the debt and sent [Biedryck] a Notice of Acceleration.”
It noted that “while it is true that [it] accelerated the loan several times prior, all of
those occasions were abandoned or otherwise waived by [] accepting payments
from [Biedryck] and entering into loan forbearance agreements.” To its summary-
judgment motion, U.S. Bank attached a copy of the note, the deed of trust,
Biedryck’s payment history, its Notices of Default and Intent to Accelerate, its
Notices of Acceleration, and the parties’ SFAs and LMA.
6
Cause number 2012-55337 (80th Dist. Ct., Harris Cnty., Tex.); see TEX. R. CIV. P.
736.
7
See TEX. R. CIV. P. 736.11(a), (c) (requiring dismissal of application if respondent
files original proceeding contesting right to foreclose).
6
In his response to U.S. Bank’s summary-judgment motion, Biedryck
asserted that U.S. Bank’s December 21, 2007 application for foreclosure and the
district court’s April 1, 2008 “Foreclosure Order” “prevent [it] from claiming that
its cause of action had not accrued”; U.S. Bank could have executed an agreement
extending the limitations period, but did not; and the SFAs do not constitute
“abandonments of acceleration.” And he argued that the 2009 LMA is void
because it does not comply with the Texas Constitution.
After a hearing, the district court granted U.S. Bank summary judgment,
denying Biedryck’s request for a declaration.
Standard of Review
Declaratory judgments rendered by summary judgment are reviewed under
the same standards that govern summary judgments generally. Bowers v. Taylor,
263 S.W.3d 260, 264 (Tex. App.—Houston [1st Dist.] 2007, no pet.). To prevail
on a summary-judgment motion, a movant has the burden of establishing that it is
entitled to judgment as a matter of law and there is no genuine issue of material
fact. TEX. R. CIV. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995).
When a defendant moves for summary judgment, it must either (1) disprove at
least one essential element of the plaintiff’s cause of action or (2) plead and
conclusively establish each essential element of its affirmative defense, thereby
defeating the plaintiff’s cause of action. Cathey, 900 S.W.2d at 341; Yazdchi v.
7
Bank One, Tex., N.A., 177 S.W.3d 399, 404 (Tex. App.—Houston [1st Dist.] 2005,
pet. denied). When deciding whether there is a disputed, material fact issue
precluding summary judgment, evidence favorable to the non-movant will be taken
as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex. 1985).
Every reasonable inference must be indulged in favor of the non-movant and any
doubts must be resolved in its favor. Id. at 549.
Limitations
In his first issue, Biedryck argues that the district court erred in granting
U.S. Bank summary judgment because it filed its application to foreclose in 2007,
the district court granted the application in 2008, and more than four years have
passed since its action accrued. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 16.035(b) (Vernon 2002) (“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 cause of action accrues.”).
It is true that “[o]n the expiration of the four-year limitations period, the real
property lien and a power of sale to enforce the real property lien become void.”
Id. § 16.035(d). However, “[i]f a series of notes or obligations or a note or
obligation payable in installments is secured by a real property lien, the four-year
limitations period does not begin to run until the maturity date of the last note,
obligation, or installment.” Id. § 16.035(e); Holy Cross Church of God in Christ v.
8
Wolf, 44 S.W.3d 562, 566 (Tex. 2001) (noting section 16.035 modifies general rule
that claim accrues and limitations begins to run on each installment when it
becomes due).
“If a note secured by a real property lien is accelerated pursuant to the terms
of the note, then the date of accrual becomes the date the note was accelerated.”
Khan v. GBAK Props., Inc., 371 S.W.3d 347, 353 (Tex. App.—Houston [1st Dist.]
2012, no pet.). Acceleration requires (1) notice of intent to accelerate and
(2) notice of acceleration. Holy Cross, 44 S.W.3d at 566. Both notices must be
“clear and unequivocal.” Id. (quoting Shumway v. Horizon Credit Corp., 801
S.W.2d 890, 893 (Tex. 1991)).
U.S. Bank’s summary-judgment evidence establishes that, under its terms,
Biedryck’s note would have matured on April 1, 2035. However, U.S. Bank on
July 6, 2012, sent Biedryck a Notice of Default and Intent to Accelerate. And, on
August 7, 2012, U.S. Bank sent Biedryck a “Notice of Acceleration,” stating that it
had not received payment and therefore had “elected to accelerate the maturity of
the debt.” See Holy Cross, 44 S.W.3d at 566 (noting acceleration requires notice
of intent to accelerate and notice of acceleration). Thus, U.S. Bank’s cause of
action accrued on August 7, 2012, the date that it accelerated Biedryck’s debt. See
Khan, 371 S.W.3d at 353 (noting date of acceleration constitutes date of accrual).
U.S. Bank then filed its application for foreclosure on September 20, 2012, which
9
was within the four-year-limitations period. See TEX. CIV. PRAC. & REM. CODE
ANN. § 16.035(b).
Biedryck argues that U.S. Bank’s cause of action actually accrued in March,
August, or December 2007, because these are the dates that he first defaulted on
the note and U.S. Bank first sent him notices regarding acceleration of his loan.
U.S. Bank notes that although it had previously accelerated the loan, it abandoned
each of its prior accelerations by accepting payments from Biedryck and entering
into the loan forbearance and modification agreements with him.
Once a noteholder has accelerated a note, it may abandon its acceleration by
agreement or by continuing to accept payments “without exacting any remedies
available to it upon declared maturity.” Holy Cross, 44 S.W.3d at 566–67; Khan,
371 S.W.3d at 353. Abandonment of acceleration restores the contract to its
original terms and restores the note’s original maturity date. Khan, 371 S.W.3d at
353.
Here, the summary-judgment evidence does show that U.S. Bank, on
November 7, 2007, sent Biedryck a Notice of Intent to Accelerate and, on
December 21, 2007, it applied for a “Home Equity Foreclosure Order.” However,
the summary-judgment evidence further shows, and Biedryck does not dispute,
that U.S. Bank later accepted payments from Biedryck from February to April
2008 and did not take further action against him on the declared maturity.
10
Although the district court, on April 1, 2008, signed U.S. Bank’s previously
requested order authorizing foreclosure on Biedryck’s property, U.S. Bank took no
affirmative steps to foreclose. Thus, U.S. Bank abandoned its acceleration. See
Holy Cross, 44 S.W.3d at 566–67.
Although the summary-judgment evidence does show that U.S. Bank on
December 17, 2008 again accelerated the debt and sent Biedryck a Notice of
Acceleration, it also shows that U.S. Bank again accepted payments from Biedryck
from May to August 2009 and did not take action against him on the declared
maturity. See id. Indeed, the summary-judgment evidence establishes that on
May 20, 2009, “[i]n an attempt to assist [Biedryck] to bring his loan back up to
date,” U.S. Bank entered into a SFA with Biedryck, revising his payment schedule
“in order to catch [him] up on his delinquent payments.” Thus, U.S. Bank once
again abandoned its acceleration. See id. And U.S. Bank, after accepting
payments from Biedryck from February through April 2010 and executing a new
SFA, then dismissed its 2010 application for foreclosure. As noted above, the
four-year statute of limitations on U.S. Bank’s power of sale accrued with its 2012
acceleration. See Khan, 371 S.W.3d at 353.
Biedryck asserts that “[c]ontrary to the Holy Cross standard, U.S. Bank did
not continue to idly accept payments between the day when the loan was
accelerated in 2007 and when the Order was issued in 2008.” And “[r]ather than
11
waiving [the] 10-month payment failure, and agreeing to accept payments that
were not made as a basis for rescinding the acceleration, U.S. Bank instead used
the payment failure as evidence” to obtain the district court’s April 1, 2008 order.
Holy Cross requires only that a lender accept payments “without exacting any
remedies available to it upon declared maturity.” 44 S.W.3d at 566–67; Khan, 371
S.W.3d at 353.
Biedryck further asserts that U.S. Bank “exact[ed] . . . remedies available to
it upon declared maturity” by (1) filing “applications” for orders of foreclosure on
August 6, 2007 and December 21, 2007 and (2) obtaining the district court’s April
1, 2008 order authorizing foreclosure. U.S. Bank did utilize an expedited
procedure to apply for a court order to “allow foreclosure” of a lien containing a
power of sale. See TEX. R. CIV. P. 736. However, rule 736 merely provides a
procedural device to obtain authorization to proceed with the remedy of
foreclosure. See id. cmt. And the district court’s April 1, 2008 order expressly
states that U.S. Bank “may” proceed with foreclosure. It is undisputed, however,
that U.S. Bank did not proceed. Rather, it executed an SFA with Biedryck,
allowing him to restructure his payments.
Biedryck next argues that the limitations period was not “tolled” because the
parties did not execute an extension agreement. See TEX. CIV. PRAC. & REM. CODE
ANN. § 16.036. The four-year limitations period can be suspended by filing a
12
written agreement in the county clerk’s office where the real property is located.
Id.; Holy Cross, 44 S.W.3d at 567. Suspension of the statute of limitations,
however, “does not concern the acceleration of a note or the abandonment of that
acceleration.” Khan, 371 S.W.3d at 355–56 (discussing inapplicability of section
16.036 to abandonment of acceleration). Biedryck also argues that the SFAs did
not “toll the statutory limitations” period because they were illusory, in that U.S.
Bank expressly retained its right to foreclose. However, a formal written
agreement is not required to abandon acceleration, and a note holder may abandon
acceleration by action alone and without an express agreement. Holy Cross, 44
S.W.3d at 566–67; Khan, 371 S.W.3d at 356; Santibanez v. Saxon Mortgage, Inc.,
No. 11-10-00227-CV, 2012 WL 3639814, at *2–3 (Tex. App.—Eastland Aug. 23,
2012, no pet.) (mem. op.) (“parties can abandon acceleration by their actions
alone”).
Taking as true all evidence favorable to Biedryck and indulging every
reasonable inference in his favor, as we must, we conclude that U.S. Bank
conclusively established, as a matter of law, that its lien and power of sale had not
expired. Accordingly, we hold that the district court did not err in granting U.S.
Bank summary judgment.
We overrule Biedryck’s first issue.
13
Constitutionality of Loan Modification
In his second issue, Biedryck argues that the district court erred in granting
U.S. Bank summary judgment because the “Loan Modification, and its closing,
[are] void as a matter of law.” See TEX. CONST. art. XVI § 50(a)(6). He also
asserts that “issues of material fact concerning the loan modification’s validity”
preclude summary judgment.
We note that Biedryck, in his petition, did not seek a declaration from the
district court on this point. And U.S. Bank did not move for summary judgment on
this ground. Rather, in his response to U.S. Bank’s summary-judgment motion,
Biedryck argued for the first time that the 2009 LMA “is not a valid home equity
lien” because it failed to state that it was a security instrument; increased the lien
against the property to more than eighty percent of the property value; added fees
that could have exceeded the three percent limit; was not preceded by a twelve-day
notice; and was signed at his home.
To the extent that Biedryck asserts that the LMA is invalid and therefore
cannot support U.S. Bank’s abandonment of acceleration, other evidence, as
discussed above, establishes such abandonment as a matter of law.
Moreover, the Texas Supreme Court, in Sims v. Carrington Mortgage
Services, L.L.C., recently held that “[i]f the restructuring of a home equity loan
does not involve a new extension of credit, the requirements of Section 50(a)(6) do
14
not apply.” 440 S.W.3d 10, 15 (Tex. 2014). In Sims, the borrowers and their
lender entered into a loan modification agreement, which lowered the interest rate
and payments, capitalized past-due interest, fees, property taxes, and insurance
premiums, and provided that all of the obligations under the original note and
security agreement remained unchanged. Id. at 12. Subsequently, the borrowers
brought a class action suit against the lender, alleging that the loan modification,
for them and other similarly situated borrowers, violated Article XVI, section 50 of
the Texas Constitution. Id. at 13–14. And the United States Court of Appeals for
the Fifth Circuit certified the following question, among others, to the Texas
Supreme Court:
After an initial extension of credit, if a home equity lender enters into
a new agreement with the borrower that capitalizes past-due interest,
fees, property taxes, or insurance premiums into the principal of the
loan but neither satisfies nor replaces the original note, is the
transaction a modification or a refinance for purposes of Section 50 of
Article XVI of the Texas Constitution?
Id. at 13. In answering the question, the supreme court explained that
the restructuring of a home equity loan that . . . involves capitalization
of past-due amounts owed under the terms of the initial loan and a
lowering of the interest rate and the amount of installment payments,
but does not involve the satisfaction or replacement of the original
note, an advancement of new funds, or an increase in the obligations
created by the original note, is not a new extension of credit that must
meet the requirements of Section 50.
Id. at 17.
15
Here, like the loan modification agreement in Sims, Biedryck’s LMA shows
that it “amends and supplements” the note and deed of trust dated March 17, 2005,
and the “amount payable under the Note and Security Instrument” is $61,404.39,
which consists of “unpaid amount(s) loaned . . . plus any interest and other
amounts capitalized.” The LMA lowered Biedryck’s interest rate to five percent
and his monthly payments to $308.82. And the LMA notes that the prior
obligations under the note and security instrument were still in force. See id. at 12.
Thus, Biedryck’s LMA did not constitute a new extension of credit subject to the
requirements of section 50(a)(6). See id. at 17.
We overrule Biedryck’s second issue.
Conclusion
We affirm the judgment of the district court.
Terry Jennings
Justice
Panel consists of Justices Jennings, Massengale, and Lloyd.
16