Reagan Florey and Neila Florey, Individually and as Trustees for the Mercedes 2004 Trust 6438 v. U.S. Bank National Association, Trustee for the RMAC Trust, Series 2016-CCT and Nationstar Mortgage, L.L.C.

Opinion

AFFIRMED and Opinion Filed June 21, 2021

S In The Court of Appeals Fifth District of Texas at Dallas No. 05-20-00306-CV

REAGAN FLOREY AND NEILA FLOREY, INDIVIDUALLY AND AS TRUSTEES FOR THE MERCEDES 2004 TRUST # 6438, Appellants V. U.S. BANK NATIONAL ASSOCIATION, TRUSTEE FOR THE RMAC TRUST, SERIES 2016-CCT AND NATIONSTAR MORTGAGE, L.L.C., Appellees

On Appeal from the 162nd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-19-05797

MEMORANDUM OPINION Before Justices Osborne, Reichek, and Nowell Opinion by Justice Reichek Reagan and Neila Florey, individually and as trustees for the Mercedes 2004

Trust #6438, appeal the trial court’s summary judgments in favor of U.S. Bank

National Association, trustee for the RMAC Trust, Series 2016–CCT and Nationstar

Mortgage, L.L.C. In two issues, the Floreys contend the trial court erred in granting

U.S. Bank’s and Nationstar’s motions for summary judgment and dismissing their

claims to quiet title because U.S. Bank’s attempt to foreclose the lien securing their home equity loan is barred by the statute of limitations. For the reasons that follow,

we affirm the trial court’s judgments.

Background

In 2007, the Floreys obtained a home equity loan evidenced by a promissory

note in the amount of $392,000. Along with the promissory note, the Floreys

executed a deed of trust lien securing the property. Through a series of transfers and

assignments among various lenders, Nationstar became the mortgagee and, on

October 19, 2012, it received an assignment of the Florey’s deed of trust.

It is undisputed that the Floreys defaulted on their loan. Nationstar sent the

Floreys a notice of default on September 6, 2013. Three months later, on December

19, Nationstar sent the Floreys a notice of acceleration of their debt. Following the

acceleration, however, Nationstar continued to send the Floreys monthly mortgage

statements seeking only the current and past due amounts rather than the full amount

of the loan. The monthly statements included payment coupons to bring the loan

current. The statements sent from February 2014 until January 2016 further

informed the Floreys that Nationstar would not assess a prepayment penalty “in the

event that [they] would like to pay all or part of [their] mortgage balance.” No

reference was made in the statements to acceleration of the debt, foreclosure, or any

reinstatement of the loan following acceleration.

In August 2014, Neila Florey filed a petition for bankruptcy that was

dismissed in April 2015. Beginning in November 2015, Nationstar began sending

–2– the Floreys delinquency notices in addition to the monthly mortgage statements. The

notices stated the loan must be brought current by payment of the past due amounts

and “[f]ailure to bring your loan current may result in fees, possibly even foreclosure

and loss of your home.” The notices additionally suggested possible workout

solutions to the delinquency including modifying the terms of the loan or receiving

a payment forbearance to provide “more time to pay [the] monthly payment.” Again,

no reference was made to either acceleration or reinstatement.

On August 10, 2017, Nationstar filed an application for an expedited

foreclosure under rule 736 of the Texas Rules of Civil Procedure. The application

expressly relied on the notice of default sent on September 6, 2013. Shortly

thereafter, the monthly mortgage statements sent by Nationstar specifically informed

the Floreys that their loan had been accelerated. The statements set forth both the

acceleration amount due and the reinstatement amount due. In addition, the

statements informed the Floreys,

The Reinstatement Amount Due is the amount you must pay as of the date of this billing to bring your loan current. Your loan has been accelerated. The Accelerated Amount Due is the approximate payoff as of the date of the billing statement. Neither of these amounts include fees and costs incurred but not yet billed. Please call us to request a reinstatement quote or payoff quote as these amounts will change frequently. We require all reinstatement payments to be made in certified funds through either a cashier’s check or money order made payable and mailed to Nationstar Mortgage LLC d/b/a Mr. Cooper.

The payment coupons included with the statements specified they were for the

reinstatement amount.

–3– On May 25, 2018, the trial court denied Nationstar’s motion for expedited

foreclosure. Approximately six months later, Nationstar transferred the Floreys’

note and deed of trust to U.S. Bank.

On January 15, 2019, U.S. Bank filed a second application for expedited

foreclosure under rule 736 of the Texas Rules of Civil Procedure. Attached to the

petition was a copy of the note and deed of trust, the notice of default sent by

Nationstar in September 2013, and the assignment of the lien.

In response to the application, the Floreys filed this suit against both U.S.

Bank and Nationstar seeking to quiet title to the property. The Floreys’ asserted that

the deed of trust lien was void because no foreclosure occurred within the four-year

limitations period following the December 2013 acceleration of the debt. Even

taking into account the seven months and eleven days that Neila Florey was in

bankruptcy, the Floreys assert the foreclosure had to be initiated no later than July

28, 2018, which was approximately six months before U.S. Bank filed its application

to foreclose.

On September 10, 2019, U.S. Bank sent the Floreys a new notice of default

and intent to accelerate. The notice stated the entire debt would be accelerated unless

the default was cured within thirty days. The notice was followed three months later

by a counterclaim in this suit in which U.S. Bank sought a declaratory judgment to

allow it to foreclose its lien on the property. Nationstar responded to the Floreys’

–4– suit with various affirmative defenses including that the Floreys lacked standing to

bring the claims asserted against it.

All parties filed motions for summary judgment. The Floreys filed a motion

for traditional summary judgment, contending U.S.Bank’s attempt to foreclose the

lien was not timely brought within the four-year limitations period. Because the

limitations period had expired, the Floreys argued the lien was no longer valid. The

Floreys further contended the lien became invalid before Nationstar transferred the

loan to U.S. Bank, thus potentially rendering the transfer void. Based on the

possibility of a void transfer, the Floreys argued they had standing to assert a claim

to quiet title against Nationstar.

U.S. Bank filed a motion for traditional and no-evidence summary judgment.

In its motion, U.S. Bank contended the summary judgment evidence conclusively

showed (1) the 2013 acceleration had been abandoned, (2) the Floreys were in

default on their note, (3) the Floreys were properly notified of their default on

September 10, 2019, and (4) the bank was entitled to conduct a non-judicial

foreclosure sale of the subject property as a matter of law. The bank further

contended the Floreys had no evidence to support their action to quiet title.

Nationstar also filed a motion for no-evidence summary judgment arguing the

Floreys had no evidence to establish Nationstar had asserted a claim to the subject

property or that they had standing to assert a claim against Nationstar.

–5– The trial court denied the Florey’s motion for summary judgment and granted

the motions brought by U.S. Bank and Nationstar. The Floreys then brought this

appeal.

Analysis

I. Standard of Review

We review a trial court’s decision to grant a motion for summary judgment de

novo. Helix Energy Solutions Grp., Inc. v. Gold, 522 S.W.3d 427, 431 (Tex. 2017).

“We review the evidence presented in the motion and response in the light most

favorable to the party against whom the summary judgment was rendered, crediting

evidence favorable to that party if reasonable jurors could, and disregarding contrary

evidence unless reasonable jurors could not.” Mann Frankfort Stein & Lipp

Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). To prevail on a

traditional motion for summary judgment, the movant has the burden to demonstrate

that no genuine issue of material fact exists and judgment should be rendered as a

matter of law. TEX. R. CIV. P. 166a(c). “When both sides move for summary

judgment and the trial court grants one motion and denies the other, the reviewing

court should review both sides’ summary judgment evidence and determine all

questions presented.” FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868,

872 (Tex. 2000). For a no-evidence motion, the non-movant must produce evidence

raising a genuine issue of material fact to defeat the summary judgment. Ford Motor

Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004).

–6– II. Abandonment of Acceleration

The pivotal issue in this case is whether the 2013 acceleration of the Floreys’

note was abandoned. A suit for foreclosure must be brought no later than four years

after the cause of action accrues. TEX. CIV. PRAC. & REM. CODE ANN. § 16.035(a).

If 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). Where the note or deed of trust

secured by real property contains an optional acceleration clause, the cause of action

accrues when the holder of the note actually exercises its option to accelerate, and

foreclosure must occur within four years of that date. Holy Cross Church of God in

Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001).

Once a debt has been accelerated, the note holder may unilaterally waive or

abandon the acceleration so long as the borrower neither objects to the abandonment

nor detrimentally relied on the acceleration. Ankus, L.L.C. v. U.S. Bank Trust, Nat’l

Ass’n, No. 01-18-00777-CV, 2020 WL 4118025, at *3 (Tex. App.—Houston [1st

Dist.] July 21, 2020, pet. denied) (mem. op.). Abandonment can occur either

expressly through a clear repudiation of the right, or impliedly through conduct

inconsistent with a claim to the right. Id. In the absence of other evidence,

communications sent to the borrower “replete with language inconsistent with the

then-present right to foreclose” will compel the conclusion that the lender abandoned

its acceleration of the debt. NSL Prop. Holdings, LLC v. Nationstar Mortg. LLC,

–7– No. 02-16-00397-CV, 2017 WL 3526354, at *5 (Tex. App.—Fort Worth Aug. 17,

2017, pet. denied) (mem. op.). When acceleration is abandoned, the contract is

restored to its original condition, including restoring the loan’s original maturity date

and resetting the statute of limitations. Id. Whether acceleration has been effectively

abandoned is a question of law when the relevant facts are undisputed. Graham v.

LNV Corp., No. 03-16-00235-CV, 2016 WL 6407306, at *3 (Tex. App.—Austin

Oct. 26, 2016, pet. denied) (mem. op.).

In their first issue, the Floreys contend the trial court erred in granting U.S.

Bank’s motion for summary judgment because the evidence does not show the

lenders acted in a manner inconsistent with continued reliance on the December

2013 acceleration. They argue the evidence shows instead that both U.S. Bank and

Nationstar reaffirmed the 2013 acceleration up to and beyond the date at which

limitations expired.

Texas courts have consistently held that a lender may abandon acceleration

by sending subsequent notices seeking payment of less than the full amount of the

loan when such correspondence “unequivocally manifests an intent to abandon the

prior acceleration.” Ernst v. Ocwen Loan Servicing, LLC, No. 1:18-CV-428-RP,

2019 WL 7761444, at *5 (W.D. Tex. Nov. 22, 2019); Citibank N.A. as Trustee for

NRZ Pass-Through Trust VI and Newrez LLC v. Pechua, Inc., No. 14-19-00337-CV,

2021 WL 1623107, at *6 (Tex. App.—Houston [14th Dist.] April 27, 2021, no pet.

h.). Language inconsistent with acceleration and a present right to foreclose can

–8– manifest such intent. See Boren v. U.S. Nat’l Bank Ass’n, 807 F.3d 99, 106 (5th Cir.

2015); NSL, 2017 WL 3526354, at *5.

The Floreys do not dispute that the monthly statements and delinquency

notices they received following the acceleration of their loan sought to collect less

than the full amount due under the note. They argue that these statements were not

inconsistent with acceleration because, under the terms of their note, they had a right

to reinstatement following acceleration if they paid the sums due as if no acceleration

had occurred. But, unlike the statements sent after the August 2017 expedited

foreclosure filing, the monthly statements sent to the Floreys following the 2013

acceleration made no reference to acceleration or a reinstatement amount. More

importantly, both the monthly statements and delinquency notices following the

2013 acceleration contained language entirely inconsistent with acceleration of the

debt.

The monthly mortgage statements sent to the Floreys from February 2014 to

January 2016 specifically informed them that they could prepay part or all of their

mortgage balance, “if [they] would like to,” without incurring a penalty. A notice

regarding optional, voluntary prepayment of part or all of the mortgage balance is

clearly antithetical to acceleration of the loan. Cf. Affiliated Capital Corp. v.

Commercial Fed. Bank, 834 S.W.2d 521, 526 (Tex. App.—Austin 1992, no writ)

(contrasting voluntary prepayment of loan from payment based on acceleration). In

addition, the delinquency notices stated the failure to “bring the loan current” could

–9– result in fees or possibly foreclosure, and suggested workout solutions including

modifying the terms of the loan or temporary forbearance of the monthly payment.

As with the voluntary prepayment language, statements regarding a possible right to

foreclose in the future, modifying loan terms, and forbearance of monthly payments

are all inconsistent with acceleration and a then-present right to foreclose. The

delinquency notices contained no reference to, or reservation of, Nationstar’s rights

following acceleration, and Nationstar took no action to foreclose on the property

until it filed its application for an expedited foreclosure in August 2017.

The Floreys contend that, because the expedited foreclosure applications filed

in August 2017 and January 2019 expressly relied on the 2013 notice of default, they

necessarily demonstrated that the 2013 acceleration had not been abandoned. The

Florey’s reasoning is flawed. Although the lenders’ foreclosure applications both

relied on the 2013 notice of default, nothing in the applications demonstrated

reliance on the 2013 acceleration. The applications for expedited foreclosure by

themselves constituted notices of acceleration. See Burney v. Citigroup Global

Mkts. Realty Corp., 244 S.W.3d 900, 904 (Tex. App.—Dallas 2008, no pet.).

The Floreys point to Fifth Circuit authority that, once an acceleration has been

abandoned, any subsequent foreclosure action must be preceded by a new notice of

default and intent to accelerate. See Wilmington Trust, N.A. v. Rob, 891 F.3d 174,

177 (5th Cir. 2018) (making Erie guess that Texas Supreme Court would require new

notice of default and intent to accelerate after rescission or abandonment of

–10– acceleration). But this authority only serves to call into question the propriety of the

expedited foreclosure applications, which is not an issue before us since U.S. Bank’s

request for declaratory judgment relies on its September 2019 notice of default and

the counterclaim for foreclosure in this suit. The Floreys cite no authority for the

proposition that an attempt to foreclose without a new notice of default following

clear abandonment of acceleration would somehow “undo” the abandonment. The

very authority they rely on suggests the opposite. Id.; cf. Calderon v. Bank of N.Y.

Mellon as Tr. for Certificateholders of CWABS, Inc. Asset-Backed Certificate Series

2006-22, 791 Fed. App’x 453, 457 (5th Cir. 2019) (abandonment not undone by later

notification returning borrower to pre-abandonment default status).

Even reading the evidence in the light most favorable to the Floreys, as we

must, the collective summary judgment evidence shows that Nationstar

unequivocally abandoned its 2013 acceleration of the Floreys’ debt. Because the

2013 acceleration was abandoned, the lien did not become invalid in 2018 and U.S.

Bank’s suit for foreclosure is not time-barred. We resolve the Floreys’ first issue

against them.

III. Pleading Verification

In their second issue, the Floreys contend the trial court erred in dismissing

their quiet title claim against Nationstar because Nationstar failed to file a verified

pleading in support of its capacity challenge. They further contend the evidence

showed Nationstar’s transfer of the lien to U.S. Bank was void due to expiration of

–11– the limitations period. With respect to the latter assertion, we have already

concluded the lien was valid at the time it was transferred from Nationstar to U.S.

Bank. Accordingly, that argument lacks merit.

As for the Floreys’ contention that Nationstar was required to file a verified

pleading, the defense raised by Nationstar to the Floreys’ quiet title claim was not

that the Floreys lacked capacity to bring it, or that they had sued Nationstar in the

wrong capacity. Rather, Nationstar contended the Floreys lacked standing to assert

a quiet title claim against it because Nationstar had transferred all rights to the lien

at issue to U.S. Bank. Because Nationstar was no longer the holder of the note or

deed of trust, it argued there was no real controversy between Nationstar and the

Floreys that would be resolved by the claim asserted against it. See Nootsie, Ltd. v.

Williamson Cty Appraisal Dist., 925 S.W.2d 659, 662 (Tex. 1996) (general test for

standing requires real controversy between parties that will be actually determined

by judicial declaration sought).1 Unlike capacity, a challenge to standing cannot be

waived and no verified pleading is required. Id. We resolve the Floreys’ second

issue against them.

1 We express no opinion as to whether lack of standing is a proper challenge to the Floreys’ quiet title claim. –12– Based on the foregoing, we conclude the trial court properly granted U.S.

Bank’s and Nationstar’s motions for summary judgment and dismissed the Floreys’

claims against them. We affirm the trial court’s judgments.

/Amanda L. Reichek/ AMANDA L. REICHEK JUSTICE

200306F.P05

–13– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT

REAGAN FLOREY AND NEILA On Appeal from the 162nd Judicial FLOREY, INDIVIDUALLY AND District Court, Dallas County, Texas AS TRUSTEES FOR THE Trial Court Cause No. DC-19-05797. MERCEDES 2004 TRUST # 6438, Opinion delivered by Justice Appellants Reichek. Justices Osborne and Nowell participating. No. 05-20-00306-CV V.

U.S. BANK NATIONAL ASSOCIATION, TRUSTEE FOR THE RMAC TRUST, SERIES 2016- CCT AND NATIONSTAR MORTGAGE, L.L.C., Appellees

In accordance with this Court’s opinion of this date, the judgments of the trial court are AFFIRMED.

It is ORDERED that appellees U.S. BANK NATIONAL ASSOCIATION, TRUSTEE FOR THE RMAC TRUST, SERIES 2016-CCT AND NATIONSTAR MORTGAGE, L.L.C. recover their costs of this appeal from appellants REAGAN FLOREY AND NEILA FLOREY, INDIVIDUALLY AND AS TRUSTEES FOR THE MERCEDES 2004 TRUST # 6438.

Judgment entered June 21, 2021

–14–