Deutsche Bank v. Castrellon ( 2021 )

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opinion should not be published and is not precedent except under the limited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.
2
Case: 20-40534 Document: 00515933324 Page: 3 Date Filed: 07/12/2021
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.
3
Case: 20-40534 Document: 00515933324 Page: 4 Date Filed: 07/12/2021
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,
4
Case: 20-40534 Document: 00515933324 Page: 5 Date Filed: 07/12/2021
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.
5