Suniverse v. Encore Credit ( 2021 )


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  • Case: 21-20072    Document: 00516003202        Page: 1    Date Filed: 09/03/2021
    United States Court of Appeals
    for the Fifth Circuit                            United States Court of Appeals
    Fifth Circuit
    FILED
    No. 21-20072                  September 3, 2021
    Lyle W. Cayce
    Clerk
    Suniverse, L.L.C.,
    Plaintiff—Appellant,
    versus
    Encore Credit Corporation, doing business as ECC
    Credit Corporation of Texas; Lasalle Bank National
    Association, as Trustee for Certificate Holders of
    Bear Stearns Asset Backed Securities I LLC, Asset
    Backed Certificates, Series 2006-HE10; JPMorgan Chase
    Bank, National Association; U.S. Bank, N.A., Successor
    Trustee to LaSalle Bank National Association, on
    behalf of the holders of Bear Stearns Asset Backed
    Securities I Trust 2006-HE10, Asset Backed Certificates
    Series 2006-HE-10; Select Portfolio Servicing,
    Incorporated; Mortgage Electronic Registration
    Systems, Incorporated,
    Defendants—Appellees.
    Appeal from the United States District Court
    for the Southern District of Texas
    USDC No. 4:19-CV-2331
    Before Stewart, Ho, and Engelhardt, Circuit Judges.
    Case: 21-20072      Document: 00516003202          Page: 2   Date Filed: 09/03/2021
    No. 21-20072
    Per Curiam:*
    Suniverse LLC appeals the summary judgment in favor of
    Defendants. Because there are no genuine disputes of material fact as to
    Defendants’ rescission of acceleration, we AFFIRM.
    I. FACTUAL AND PROCEDURAL HISTORY
    On September 25, 2006, Carol Reed took out a home equity loan
    worth $528,000.00 on her residence in Richmond, Texas. Encore Credit
    Corporation (“Encore”) was the lender on the note, and Reed executed a
    Deed of Trust in favor of Encore to secure the note. The Deed of Trust was
    filed with Fort Bend County on October 3, 2006. Ownership of the note
    changed hands several times, and U.S. Bank is the current holder of the note.
    Select Portfolio Servicing Inc. (“SPS”) has serviced the note since June 1,
    2013.
    On November 4, 2014, SPS sent Reed a Notice of Default that advised
    her that she had one month to cure the default by paying $568,059.71. The
    notice informed her that if she failed to cure the default, “the Noteholder
    [would] accelerate all payments owing on [the] Note and require that [she]
    pay all payments owing on [the] Note and require that [she] pay all payments
    owing and sums secured by the Security Instrument in full.” On May 21,
    2015, SPS sent Reed a Notice of Acceleration. The Notice of Acceleration
    advised Reed that:
    Because of default in payment of the monthly mortgage
    payments due under the Note, the Mortgagee has elected to
    ACCELERATE the maturity of the debt and declare all sums
    due under the Note immediately due and payable without
    *
    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.
    2
    Case: 21-20072      Document: 00516003202          Page: 3   Date Filed: 09/03/2021
    No. 21-20072
    further demand, and is proceeding to foreclose in accordance
    with Tex. Const. Art. XVI § 50(a)(50)(D) and under the terms
    of the Security Instrument.
    On May 11, 2017, SPS filed an application for expedited foreclosure in
    state court, and the court granted the application on August 21, 2017. SPS
    never foreclosed on the property, and on March 12, 2019, SPS sent Reed a
    Notice of Rescission of Acceleration of Note (“Notice of Rescission”)
    stating that:
    Pursuant to Texas Civil Practice and Remedies Code § 16.038,
    the owner of the Note, in the original principal amount of
    $528,000.00 dated September 25, 2006, secured by a lien on
    the property located at 818 Kings Forest Lane, Richmond, TX
    77469, (the “Note”) hereby rescinds all previous notices of ac-
    celeration of the Note. This notice does not waive past defaults
    on the Note nor does it waive or affect the Note owner’s right
    to accelerate the maturity of the Note in the future.
    On March 13, 2019, SPS sent Reed a letter offering to enter a new re-
    payment plan (with a lower interest rate than her original note) and giving
    her until April 6, 2019 to accept the offer. Reed did not expressly accept the
    offer and she did not make any payments on the loan. On March 28, 2019,
    SPS sent Reed a new Notice of Acceleration and a Notice of Trustee’s Sale
    indicating that the property would be sold on May 7, 2019. The foreclosure
    sale never occurred.
    Previously, in January 2018, Reed gave a warranty deed to her home
    to Harris Houston Homes LLC (“Harris Homes”). Harris Homes then gave
    a warranty deed to the property to Suniverse LLC (“Suniverse”) in May
    2018. Suniverse filed this suit on May 28, 2019 asserting claims for declara-
    tory judgment, quiet title, and an equitable right of redemption against En-
    core, SPS, and all other lending institutions that either owned or serviced the
    3
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    No. 21-20072
    note (collectively, “Defendants”). The parties filed cross motions for sum-
    mary judgment. The district court adopted the magistrate judge’s report and
    recommendation and entered summary judgment in favor of Defendants.
    This appeal followed.
    II. STANDARD OF REVIEW
    We review a district court’s grant of summary judgment de novo.
    Poole v. City of Shreveport, 
    691 F.3d 624
    , 627 (5th Cir. 2012). We will “grant
    summary judgment if the movant shows that 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).
    III. DISCUSSION
    On appeal, Suniverse argues that the district court erred because there
    are genuine factual disputes about Defendants’ rescission of acceleration. We
    disagree.
    Suniverse first argues that the statute of limitations for Defendants to
    foreclose on the property expired and that Defendants therefore lost their
    ability to foreclose on the property. “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 § 16.035(b). “On 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. at § 16.035(d). The four-year limitations
    period “does not begin to run until the maturity date of the last note, obliga-
    tion, or installment.” Id. at § 16.035(e).
    When a note contains an optional acceleration clause, default begins
    when the holder accelerates the note. Holy Cross Church of God in Christ v.
    Wolf, 
    44 S.W.3d 562
    , 566 (Tex. 2001). Before lenders can foreclose, they
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    No. 21-20072
    must provide “clear and unequivocal” notices of intent to accelerate and no-
    tices of acceleration. Shumway v. Horizon Credit Corp., 
    801 S.W.2d 890
    , 892
    (Tex. 1991). Acceleration can be reversed, inter alia 1, when a lender rescinds
    or waives acceleration under section 16.038(a). That section provides that:
    If the maturity date of . . . a note or obligation payable in install-
    ments is accelerated, and the accelerated maturity date is re-
    scinded or waived in accordance with this section before the
    limitations period expires, the acceleration is deemed re-
    scinded and waived and the note . . . shall be governed by Sec-
    tion 16.035 as if no acceleration had occurred.
    See TEX. CIV. PRAC. & REM. CODE § 16.038(a).
    Rescissions or waivers are valid under section 16.038 when lienholders
    or debt servicers give written notice to persons who are obligated to pay debts
    (according to the records of the lienholder or servicer of the debt) before the
    limitations period expires. Id. at § 16.038(b). Here, SPS sent Reed a written
    Notice of Rescission within four years of the May 21, 2015 Notice of Accel-
    eration. SPS’s Notice of Rescission complies with section 16.038(b) and ef-
    fectively withdrew the prior acceleration. Defendants are therefore not
    barred by the statute of limitations that expired on May 21, 2019.
    Suniverse next argues that even if the March 12, 2019 Notice of Re-
    scission complies with section 16.038 and provides some evidence that De-
    fendants rescinded acceleration, the March and April 2019 statements 2 evi-
    dence Defendants’ continued plan to accelerate the note. Suniverse con-
    cludes that since Defendants did not adequately rescind their acceleration,
    1
    See Boren v. U.S. Nat’l Bank Ass’n, 
    807 F.3d 99
    , 105–06 (5th Cir. 2015).
    2
    Both were sent after the Notice of Rescission.
    5
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    No. 21-20072
    they are beholden to the four-year statute of limitations in section 16.035(b)
    and are barred from seeking a foreclosure sale.
    We disagree with Suniverse’s position. While lenders may abandon
    their right of acceleration by their conduct, see Sexton v. Deutsche Bank Nat’l
    Trust Co., 731 F. App’x 302, 305–08 (5th Cir. 2018), it is unclear whether
    Texas law permits them to abandon the abandonment of (or in other words,
    to revive) their acceleration via conduct. Moreover, any intent to abandon
    must be “unequivocally manifested.” 
    Id.
     at 305 (citing Thompson v. Bank of
    Am. Nat’l Ass’n, 
    783 F.3d 1022
    , 1025 (5th Cir. 2015)). The two mortgage
    statements do not evidence a clear and unequivocal intent to revive Defend-
    ants’ right of acceleration. Defendants’ Notice of Rescission clearly states
    that “the owner of the Note . . . hereby rescind[] all previous notices of ac-
    celeration of the Note.” This statutory method of rescission is a “best prac-
    tice for a lender seeking to effectuate its abandonment.” Boren v. U.S. Nat.
    Bank Ass’n, 
    807 F.3d 99
    , 106 (5th Cir. 2015). The two mortgage statements
    do not raise a genuine factual dispute about whether Defendants adequately
    rescinded the May 21, 2015 acceleration of the note. We thus conclude that
    the district court’s summary judgment in favor of Defendants was proper.
    IV. CONCLUSION
    For the aforementioned reasons, the judgment of the district court is
    AFFIRMED.
    6
    

Document Info

Docket Number: 21-20072

Filed Date: 9/3/2021

Precedential Status: Non-Precedential

Modified Date: 9/4/2021