ACCEPTED 01-12-00945-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 1/14/2015 5:01:39 PM CHRISTOPHER PRINE CLERK CASE NO. 01-12-00945-CV ____________________________________________________
IN THE FILED IN 1st COURT OF APPEALS FIRST COURT OF APPEALS HOUSTON, TEXAS Houston, Texas 1/14/2015 5:01:39 PM ____________________________________________________ CHRISTOPHER A. PRINE Clerk
LEE A. HARDY AND POLLY HARDY Appellant
v.
WELLS FARGO BANK, N.A., DAVID E. BROWN AND RESCONN INVESTMENTS, LLC Appellee _____________________________________________________
On Appeal from the 157th Judicial District Court Harris County, Texas Cause No. 11-07737 __________________________________________________
APPELLEE’S MOTION FOR REHEARING ____________________________________________________
George A. Kurisky, Jr. Texas Bar No. 11767700 gkurisky@jdkglaw.com Daniel J. Kasprzak Texas Bar No. 11105300 dkasprzak@jdkglaw.com Branch A. Sheppard Texas Bar No. 24033057 bsheppard@jdkglaw.com JOHNSON DeLUCA KURISKY & GOULD, P.C. 1221 Lamar, Suite 1000 Houston, Texas 77010 (713) 652-2525 – Telephone (713) 652-5130 – Facsimile ATTORNEYS FOR APPELLEE TABLE OF AUTHORITIES
TEX. CIV. PRAC. & REM. CODE § 16.035(b)……………………………………...4
Tex. R. App. P. 49.1………………………………………………………………3
Cooper v. D & D G.C. of Gilmer, Inc., 187 S.W.3d 717, 720 (Tex.App. – Tyler 2006, no pet.)…………………………..4
Hoarel Sign Co. v. Dominion Equity Corp., 910 S.W.2d 140, 144 (Tex.App. Amarillo 1995, pet denied)……………………..5
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001)…………………………………………………..4
Kerlin v. Sauceda, 263 S.W.3d 920, 925 (Tex. 2008)…………………….…………………………………………………………4
McNeill v. Simpson, 39 S.W.2d 835, 835 (Tex.Com.App. – Waco 1931)………………………………5
Natural Gas Pipeline Co. of America v. Pool 124 S.W.3d 188, 199 (Tex. 2003)…………………………………………………3
Novosad v. Svrcek, 102 S.W.2d 393, 395 (Tex. 1937)…………………………………………………5
Sefek v. Helvey, 601 S.W.2d 168, 171 (Tex.Civ.App. – Corpus Christi 1980, writ ref’d n.r.e.)……6
Sharp v. Frizzell, 153 S.W.2d 543, 544 (Tex.Civ.App. – Waco 1941, no pet.)………………………5 STATEMENT OF GROUNDS FOR REHEARING
The panel reversibly erred by holding that the April 2, 2007, and May 2,
2008 Stipulated Partial Reinstatement/Repayment Agreements (the “PRRAs”) did
not halt the running of the statue of limitations.
STATEMENT OF ISSUES PRESENTED
Wells Fargo Home Mortgage, Inc. (“Wells Fargo”) submits this motion for
rehearing, pursuant to Tex. R. App. P. 49.1, asking the panel to reconsider the
portion of its opinion that finds that because Wells Fargo did not abandon
acceleration, it did not meet its burden of proving that it was entitled to judgment
as a matter of law. As a matter of law, the PRRA agreements acted as a renewal
and extension of the underlying Note and Deed of Trust, are enforceable contracts,
and are subject to their own limitations periods.
ARGUMENT AND AUTHORITIES
I. THE PANEL REVERSIBLY ERRED BY HOLDING THAT THE APRIL 2, 2007, AND MAY 2, 2008 STIPULATED PARTIAL REINSTATEMENT/REPAYMENT AGREEMENTS (THE “PRRA’S”) DID NOT HALT THE RUNNING OF THE STATUE OF LIMITATIONS.
A. The Purpose of Limitations.
Statutes of limitation are designed to compel the assertion of claims within a
reasonable period while the evidence is fresh in the minds of the parties and
witnesses and to prevent litigation of stale or fraudulent claims. Natural Gas
1 Pipeline Co. of America v. Pool 124 S.W.3d 188, 199 (Tex. 2003). The primary
purpose of a statute of limitations is to compel the exercise of a right within a
reasonable time so that the opposite party has a fair opportunity to defend while
witnesses are available and the evidence is fresh in their minds. Cooper v. D & D
G.C. of Gilmer, Inc., 187 S.W.3d 717, 720 (Tex. App.–Tyler 2006, no pet.).
Statutes of limitation protect defendants and the courts from having to deal with
cases in which the search for truth may be seriously impaired by the loss of
evidence, whether by death or disappearance of witnesses, fading memories,
disappearance of documents or otherwise. Kerlin v. Sauceda, 263 S.W.3d 920,
925 (Tex. 2008).
B. LIMITATIONS, ACCRUAL, AND EXTENSION OF WELLS FARGO’S CAUSE OF ACTION.
As the panel noted, a sale of real property under a contractual power of sale
must be completed not later than four years after the day the cause of action
accrues. TEX. CIV. PRAC. & REM. CODE § 16.035(b). When the contract creating
the power of sale contains an optional acceleration clause, as does the Hardy’s
Deed of Trust, the cause of action accrues when the holder “actually exercises” its
option to accelerate. Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562,
567 (Tex. 2001). Washington Mutual accelerated the Hardy’s indebtedness in July
2005.
2 On April 2, 2007, and on May 2, 2008, Wells Fargo and the Hardys entered
into the PRRAs. Each of the PRAAs was in writing and signed by the Hardys and
Wells Fargo. Each agreement recites consideration. Each agreement contains
enforceable terms. Had the Hardys performed under either PRRA and Wells Fargo
attempted to foreclose, there can be no doubt that the Hardys could sue to enforce
the contractual provisions barring foreclosure. An extension of the time for
performance or for the payment of an obligation, executed by agreement of the
parties to a transaction based on sufficient consideration, constitutes a new contract
against which the statute of limitations does not begin until the expiration of the
period of extension. Novosad v. Svrcek, 102 S.W.2d 393, 395 (Tex. 1937).
Limitations does not begin to run against an action to enforce a debtor’s new
promise to pay until the time for performance of the promise arrives. McNeill v.
Simpson, 39 S.W.2d 835, 835 (Tex.Com.App. – Waco 1931). Where parties to a
note mutually agree to extend payment of the note, a new contract, based upon new
consideration, arises and sets the limitations period for collecting on the note
running anew. Hoarel Sign Co. v. Dominion Equity Corp., 910 S.W.2d 140, 144
(Tex. App.–Amarillo 1995, pet denied).
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ACCEPTED 01-12-00945-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 1/14/2015 5:01:39 PM CHRISTOPHER PRINE CLERK CASE NO. 01-12-00945-CV ____________________________________________________
IN THE FILED IN 1st COURT OF APPEALS FIRST COURT OF APPEALS HOUSTON, TEXAS Houston, Texas 1/14/2015 5:01:39 PM ____________________________________________________ CHRISTOPHER A. PRINE Clerk
LEE A. HARDY AND POLLY HARDY Appellant
v.
WELLS FARGO BANK, N.A., DAVID E. BROWN AND RESCONN INVESTMENTS, LLC Appellee _____________________________________________________
On Appeal from the 157th Judicial District Court Harris County, Texas Cause No. 11-07737 __________________________________________________
APPELLEE’S MOTION FOR REHEARING ____________________________________________________
George A. Kurisky, Jr. Texas Bar No. 11767700 gkurisky@jdkglaw.com Daniel J. Kasprzak Texas Bar No. 11105300 dkasprzak@jdkglaw.com Branch A. Sheppard Texas Bar No. 24033057 bsheppard@jdkglaw.com JOHNSON DeLUCA KURISKY & GOULD, P.C. 1221 Lamar, Suite 1000 Houston, Texas 77010 (713) 652-2525 – Telephone (713) 652-5130 – Facsimile ATTORNEYS FOR APPELLEE TABLE OF AUTHORITIES
TEX. CIV. PRAC. & REM. CODE § 16.035(b)……………………………………...4
Tex. R. App. P. 49.1………………………………………………………………3
Cooper v. D & D G.C. of Gilmer, Inc., 187 S.W.3d 717, 720 (Tex.App. – Tyler 2006, no pet.)…………………………..4
Hoarel Sign Co. v. Dominion Equity Corp., 910 S.W.2d 140, 144 (Tex.App. Amarillo 1995, pet denied)……………………..5
Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001)…………………………………………………..4
Kerlin v. Sauceda, 263 S.W.3d 920, 925 (Tex. 2008)…………………….…………………………………………………………4
McNeill v. Simpson, 39 S.W.2d 835, 835 (Tex.Com.App. – Waco 1931)………………………………5
Natural Gas Pipeline Co. of America v. Pool 124 S.W.3d 188, 199 (Tex. 2003)…………………………………………………3
Novosad v. Svrcek, 102 S.W.2d 393, 395 (Tex. 1937)…………………………………………………5
Sefek v. Helvey, 601 S.W.2d 168, 171 (Tex.Civ.App. – Corpus Christi 1980, writ ref’d n.r.e.)……6
Sharp v. Frizzell, 153 S.W.2d 543, 544 (Tex.Civ.App. – Waco 1941, no pet.)………………………5 STATEMENT OF GROUNDS FOR REHEARING
The panel reversibly erred by holding that the April 2, 2007, and May 2,
2008 Stipulated Partial Reinstatement/Repayment Agreements (the “PRRAs”) did
not halt the running of the statue of limitations.
STATEMENT OF ISSUES PRESENTED
Wells Fargo Home Mortgage, Inc. (“Wells Fargo”) submits this motion for
rehearing, pursuant to Tex. R. App. P. 49.1, asking the panel to reconsider the
portion of its opinion that finds that because Wells Fargo did not abandon
acceleration, it did not meet its burden of proving that it was entitled to judgment
as a matter of law. As a matter of law, the PRRA agreements acted as a renewal
and extension of the underlying Note and Deed of Trust, are enforceable contracts,
and are subject to their own limitations periods.
ARGUMENT AND AUTHORITIES
I. THE PANEL REVERSIBLY ERRED BY HOLDING THAT THE APRIL 2, 2007, AND MAY 2, 2008 STIPULATED PARTIAL REINSTATEMENT/REPAYMENT AGREEMENTS (THE “PRRA’S”) DID NOT HALT THE RUNNING OF THE STATUE OF LIMITATIONS.
A. The Purpose of Limitations.
Statutes of limitation are designed to compel the assertion of claims within a
reasonable period while the evidence is fresh in the minds of the parties and
witnesses and to prevent litigation of stale or fraudulent claims. Natural Gas
1 Pipeline Co. of America v. Pool 124 S.W.3d 188, 199 (Tex. 2003). The primary
purpose of a statute of limitations is to compel the exercise of a right within a
reasonable time so that the opposite party has a fair opportunity to defend while
witnesses are available and the evidence is fresh in their minds. Cooper v. D & D
G.C. of Gilmer, Inc., 187 S.W.3d 717, 720 (Tex. App.–Tyler 2006, no pet.).
Statutes of limitation protect defendants and the courts from having to deal with
cases in which the search for truth may be seriously impaired by the loss of
evidence, whether by death or disappearance of witnesses, fading memories,
disappearance of documents or otherwise. Kerlin v. Sauceda, 263 S.W.3d 920,
925 (Tex. 2008).
B. LIMITATIONS, ACCRUAL, AND EXTENSION OF WELLS FARGO’S CAUSE OF ACTION.
As the panel noted, a sale of real property under a contractual power of sale
must be completed not later than four years after the day the cause of action
accrues. TEX. CIV. PRAC. & REM. CODE § 16.035(b). When the contract creating
the power of sale contains an optional acceleration clause, as does the Hardy’s
Deed of Trust, the cause of action accrues when the holder “actually exercises” its
option to accelerate. Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562,
567 (Tex. 2001). Washington Mutual accelerated the Hardy’s indebtedness in July
2005.
2 On April 2, 2007, and on May 2, 2008, Wells Fargo and the Hardys entered
into the PRRAs. Each of the PRAAs was in writing and signed by the Hardys and
Wells Fargo. Each agreement recites consideration. Each agreement contains
enforceable terms. Had the Hardys performed under either PRRA and Wells Fargo
attempted to foreclose, there can be no doubt that the Hardys could sue to enforce
the contractual provisions barring foreclosure. An extension of the time for
performance or for the payment of an obligation, executed by agreement of the
parties to a transaction based on sufficient consideration, constitutes a new contract
against which the statute of limitations does not begin until the expiration of the
period of extension. Novosad v. Svrcek, 102 S.W.2d 393, 395 (Tex. 1937).
Limitations does not begin to run against an action to enforce a debtor’s new
promise to pay until the time for performance of the promise arrives. McNeill v.
Simpson, 39 S.W.2d 835, 835 (Tex.Com.App. – Waco 1931). Where parties to a
note mutually agree to extend payment of the note, a new contract, based upon new
consideration, arises and sets the limitations period for collecting on the note
running anew. Hoarel Sign Co. v. Dominion Equity Corp., 910 S.W.2d 140, 144
(Tex. App.–Amarillo 1995, pet denied). In such circumstances, it is the new
promise, and not the original obligation, that is subject to enforcement. Sharp v.
Frizzell, 153 S.W.2d 543, 544 (Tex. Civ. App.–Waco 1941, no pet.).
3 There are no formal requirements for an agreement to effectuate a renewal
and extension. The agreement need only express a willingness to pay the debt
without equivocation. Sefek v. Helvey, 601 S.W.2d 168, 171 (Tex. Civ. App.–
Corpus Christi 1980, writ ref’d n.r.e.).
Each of the PRRAs sets forth the Hardys’ intent and willingness to pay the
indebtedness to Wells Fargo. Each of the agreements imposed contractual
prohibitions against Wells Fargo conducting a foreclosure sale so long as the
Hardys complied with the terms of the agreement. Each PRRA expressly states
that it does not constitute a waiver of Wells Fargo’s rights and remedies under the
Note and Deed of Trust. The PRRA also states that “acceptance of any payments
made by you will not be deemed to affect the acceleration of the Note and/or
Mortgage in the event of default under the terms of this agreement and the
remainder of the accelerated loan balance shall remain due and owing.” The
terms are clear and unambiguous. Wells Fargo agreed to forego the immediate
enforcement of its contractual rights in exchange for payments made by the Hardys
pursuant to a modified payment schedule. The agreements merely contain
language that state that Wells Fargo need not re-accelerate the indebtedness if the
Hardys failed to fulfill their obligations under the PRRAs. The fact that Wells
Fargo and the Hardys agreed to forego the re-acceleration of the loan does not alter
the fact that Wells Fargo was contractually bound by the PRRA not to foreclose
until the Hardys committed a future default. The existing authority supports the 4 proposition that acceleration of a Note commences the running of the statute of
limitations for the purpose of exercising a contractual power of sale. There is no
authority that requires a permanent abandonment of acceleration in order to halt
the running of limitations.
The actions of the parties and the terms of the PRRAs make clear that the
Hardys intended to continue paying their mortgage and that Wells Fargo intended
to continue accepting payments under the PRRAs. As such, new obligations were
created, the running of the statute of limitations vis-à-vis the July 11, 2005, was
rendered irrelevant. At the earliest, the statue of limitations with respect to Wells
Fargo’s right to foreclose under the terms of the first PRRA began to run in July
2007. Wells Fargo conducted its foreclosure on March 2, 2010. Under established
precedent, the statute of limitations had not, as a matter of law, run as to Wells
Fargo’s ability to foreclose its security interest as of March 2, 2010, and the trial
court rightfully entered summary judgment on the Hardys wrongful foreclosure
claim.
C. APPELLANTS COME TO THIS COURT WITH UNCLEAN HANDS.
Plaintiffs have no damages that they may claim as a result of the alleged
wrongful foreclosure. Upon foreclosure, the total secured debt owed to Wells
Fargo was paid in full by the third party purchaser, David Brown. Plaintiffs come
to this Court with unclean hands. At the April 29, 2011 hearing on Plaintiffs’
5 Application for Temporary Injunction, the evidence proved and Plaintiffs admitted
that they accepted and negotiated excess proceeds from the foreclosure sale
totaling $22,469.07.
Plaintiffs admit to the sums owed to pay the secured indebtedness in full.
Upon foreclosure, Plaintiffs were paid for the value of the Property less the
indebtedness to Wells Fargo. As such, Plaintiffs do not have and cannot claim
damages as a result of the alleged wrongful foreclosure. Nelson v. Regions Mortg.,
Inc., 170 S.W.3d 858 (Tex. App.–Dallas 2005). He who comes into equity must
come with clean hands, and a complainant’s wrongful conduct in a matter or
transaction with respect to which he seeks injunctive relief, precludes him from
obtaining such relief. DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 682 n. 6
(Tex. 1990); Vaughn v. Kizer, 400 S.W.2d 586, 590 (Tex. Civ. App. -- Waco 1966,
writ ref=d n.r.e.).
PRAYER
Wells Fargo respectfully requests that the panel (1) grant this Motion for
Rehearing, (2) withdraw the portion of its Memorandum Opinion holding that
there are genuine issues of material fact as to Appellants’ wrongful foreclosure
claim, and (3) affirm the trial court’s summary judgment.
6 Respectfully submitted,
JOHNSON DELUCA KURISKY & GOULD A Professional Corporation
By: //s// George A. Kurisky, Jr. George A. Kurisky, Jr. Texas Bar No. 11767700 gkurisky@jdkglaw.com Daniel J. Kasprzak Texas Bar No. 11105300 dkasprzak@jdkglaw.com Branch A. Sheppard Texas Bar No. 24033057 bsheppard@jdkglaw.com 4 Houston Center 1221 Lamar, Suite 1000 Houston, Texas 77010 (713) 652-2525 - Telephone (713) 652-5130 - Telecopy
ATTORNEYS FOR APPELLEE, WELLS FARGO BANK, N.A.
CERTIFICATE OF COMPLIANCE
I hereby certify that this Motion for Rehearing complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has been prepared in a conventional typeface no smaller than 14-point for text and 12-point for footnotes. This document also complies with the word-count limitations of Tex. R. App. P. 9.4(i), if applicable, because it contains 1,516 words, excluding any parts exempted by Tex. R. App. P. 9.4(i)(1).
//s// George A. Kurisky, Jr. George A. Kurisky, Jr.
7 CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing Motion for Rehearing has been delivered via e-mail on this 14th day of January, 2015, as follows:
Via E-Mail (tfjonesiii@gmail.com) THOMAS F. JONES, III P.O. BOX 130762 HOUSTON, TEXAS 77219
//s// George A. Kurisky, Jr. George A. Kurisky