In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-18-00403-CV __________________
THE BANK OF NEW YORK MELLON, Appellant
V.
SONIA RILEY AND FLOYD RILEY, Appellees __________________________________________________________________
On Appeal from the 136th District Court Jefferson County, Texas Trial Cause No. D-201,456 __________________________________________________________________
MEMORANDUM OPINION
The Bank of New York Mellon (BONYM) sued Sonia and Floyd Riley to
foreclose on their property located in Beaumont, Texas. BONYM appeals the trial
court’s grant of the Rileys’ cross-motion for summary judgment and denial of
BONYM’s motion for new trial. 1 BONYM presents three issues on appeal asking
whether: (1) the trial court erred in granting the Rileys’ motion for summary
1 The Rileys acted pro se during the trial and do so on appeal. 1 judgment on their affirmative defense of limitations when a disputed material fact
existed regarding whether the lender “abandoned the acceleration of the debt”
whereby resetting limitations; (2) the trial court abused its discretion in failing to
grant BONYM’s motion for new trial upon BONYM establishing that the Rileys’
affidavits submitted in support of their motion for summary judgment were
submitted in bad faith; and (3) the trial court abused its discretion in failing to grant
BONYM’s motion for new trial upon BONYM’s submittal of newly discovered
evidence reflecting that the Rileys had previously settled all claims relating to the
foreclosure of their home equity deed of trust with their prior mortgage servicer. We
reverse the judgment of the trial court and remand for proceedings consistent with
this opinion.
Background
In 2004, the Rileys took out a loan for $104,000.00 secured by a note on the
property. The Rileys defaulted on the loan. In August of 2010, a prior loan servicer
sent correspondence to the Rileys putting them on notice of default and its intent to
accelerate the amounts due. BONYM obtained the note by assignment from Full
Spectrum Lending in 2011.2 On December 28, 2011, a prior loan servicer sent a
notice of acceleration to the Rileys advising it had “elected to ACCELERATE the
2 Several different servicers handled the loan. 2 maturity of the Debt.” However, on December 28, 2015, BONYM sent a notice of
rescission of the acceleration of the debt to the Rileys via certified mail. On August
16, 2016, based on the Rileys’ default, BONYM’s servicer sent them another Notice
of Default and Intent to Accelerate by certified mail. On March 13, 2018, BONYM
filed its original petition for foreclosure.
The evidence attached to BONYM’s motion for new trial reveals the parties
had an extensive history of dealings and court proceedings between the time of initial
default and the commencement of the current litigation. The record establishes that
BONYM filed at least three prior applications for foreclosure, two of which the
district court granted. The Rileys also filed suit to stop the foreclosure in a separate
district court at one point, which the trial court dismissed with prejudice at the
Rileys’ request following a settlement agreement. The Rileys answered the present
lawsuit, asserting a general denial and affirmative defenses, including the statute of
limitations.
BONYM filed a traditional motion for summary judgment with evidence in
support of its motion. Evidence included with BONYM’s motion for summary
judgment included the original loan documentation, the deed of trust, the lien
documentation, the assignment of the deed of trust to BONYM, a BONYM
representative’s affidavit, the August 2016 notice of default and intent to accelerate,
3 account history information, payoff statement form, and counsel’s affidavit
regarding attorney’s fees. The Rileys responded to BONYM’s traditional motion for
summary judgment asserting BONYM’s claim was barred by a four-year statute of
limitations. With their response, the Rileys included the December 28, 2011,
acceleration letter and affidavits from each of them containing the following
testimony:
In a notice dated August 10, 2010, Bank of America, the loan servicer for . . . predecessor in interest to Bank of New York, sent me a notice of default w/intent to accelerate. The notice stated that I was in default of the Texas home equity loan and that if I fell (sic) to cure the default, by September 19, 2010, the loan will be accelerated. In a letter dated December 28, 2011, Bank of New York . . . sent me a notice of acceleration. Replying upon information in the acceleration notice, in January 2013, I temporarily moved from the property and into a rental property . . . . Based upon Texas law, Bank of New York was required to file suit to foreclose on the property by December 28, 2015. Bank of New York failed to file suit within the statutory time limits and therefore its lien on the property is no longer valid. 3
Thereafter, the Rileys filed a cross-motion for traditional summary judgment
based on the affirmative defense of statute of limitations. Their cross-motion for
summary judgment included the same acceleration letter and affidavits as their
response to BONYM’s motion for summary judgment. The Rileys’ cross-motion for
3 The affidavits contained identical testimony except that Sonia Riley’s affidavit additionally averred she signed a quitclaim deed relinquishing any interest she had in the property. 4 summary judgment also incorporated as evidence a temporary lease agreement for
the rental they claimed they moved into after the bank threatened foreclosure as well
as a contract with a law firm. The Rileys argued that BONYM sent a notice of
acceleration dated December 28, 2011, and because of the four-year statute of
limitations, BONYM was required to foreclose on the property by December 28,
2015. The Rileys did not mention BONYM’s prior applications for foreclosure in
their response or cross-motion. The Rileys contend this foreclosure suit is barred by
the statute of limitations and the lien is void. Neither the Rileys’ response to
BONYM’s summary judgment nor their cross-motion for summary judgment
mentioned a rescission of acceleration by BONYM.
BONYM responded to the Rileys’ cross-motion for summary judgment;
however, BONYM filed this response late. Rather than filing its response the
requisite seven days before the scheduled summary judgment hearing, BONYM
filed the response three days before the hearing and did not request leave from the
trial court to submit evidence late. While BONYM agreed they sent a prior notice of
acceleration letter dated December 28, 2011, they argued that on December 28,
2015, they sent a rescission of this acceleration to the Rileys and their response
referenced the correspondence as Exhibit “A.” Despite referencing the actual letter
5 as an exhibit in its response to the motion for summary judgment, BONYM failed
to attach the actual letter as an exhibit.
One day before the scheduled summary judgment hearing, the Rileys filed a
reply to BONYM’s response to their cross-motion for summary judgment. In their
reply, the Rileys state that “[BONYM] argue[s] that the acceleration was
abandon[ed] on December 28, 2015, which allegedly restored the contract as such
no acceleration occurred. While, plaintiff attached no evidence of such
abandonment, after a search of documents, defendant(s) concede plaintiff attempted
an eleventh hour abandonment.” The Rileys attached an additional affidavit from
Floyd Riley to their reply, as well as a letter from Floyd dated January 26, 2016,
responding to the rescission of acceleration. Floyd’s affidavit avers “[o]n January
26, 2016, I sent Barrett Daffin Frappier Turner & Engel, a letter in response to a
notice I received regarding a rescission of acceleration notice send (sic) from their
law firm.” The subject line of the letter from Floyd notes “Re: Rescission of
Acceleration[.]” The Rileys contend in their reply that BONYM’s rescission of
acceleration was ineffective because they “detrimentally relied on the 2011
acceleration and objected to the abandonment.” They also complained about the
untimeliness of BONYM’s response.
6 During the summary judgment hearing, the trial court explained that while
BONYM sought a continuance on the hearing, BONYM’s stated reason was to seek
leave to amend its petition after discovering new information. However, the trial
court reasoned that a motion for leave was not needed to amend the petition, so he
denied the motion to continue the hearing. The trial court noted that BONYM filed
its response to the Rileys’ cross-motion for summary judgment late and failed to
request leave. The trial court further explained that while the response referenced
the rescission of acceleration letter as an exhibit, it failed to attach the letter, and the
Rileys objected. The trial court noted that BONYM failed to timely file a response
attaching evidence the court could consider in response and granted the Rileys’
cross-motion for summary judgment.
BONYM filed a motion for new trial attaching its rescission letter, a prior
settlement agreement between the parties, and filings from previous court
proceedings, among other things. In the motion for new trial, BONYM pointed to
the prior course of foreclosure proceedings in other district courts. BONYM argued
that the Rileys misled the court by submitting affidavits in bad faith which failed to
mention any of that information. BONYM further pointed out the Rileys
acknowledged the rescission letter. BONYM also asserted that in a prior settlement
agreement, the Rileys acquiesced to the foreclosure and waived their affirmative
7 defenses. The Rileys responded to the motion for new trial arguing BONYM failed
to show good cause or establish that the evidence was newly discovered. They also
asked the trial court to strike the evidence attached to the motion for new trial. After
a hearing, the trial court denied the motion for new trial, and BONYM timely
appealed.
Standard of Review
We review the grant of a traditional summary judgment de novo. Travelers
Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010) (citation omitted). If both
parties move for summary judgment and the trial court grants one motion and denies
the other, we review both parties’ summary judgment evidence and determine all
questions presented. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289
S.W.3d 844, 848 (Tex. 2009) (citation omitted). We then render the judgment the
trial court should have rendered. Myrad Props., Inc. v. LaSalle Bank Nat’l Ass’n,
300 S.W.3d 746, 753 (Tex. 2009) (citations omitted).
“A party moving for summary judgment must conclusively prove all elements
of its cause of action or defense as a matter of law.” Holy Cross Church of God in
Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001) (citing Tex. R. Civ. P. 166a(c);
Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); Walker v. Harris,
924 S.W.2d 375, 377 (Tex. 1996)). We consider the evidence in the light most
8 favorable to the nonmovant, crediting evidence favorable to the nonmovant if
reasonable jurors could, and disregarding evidence contrary to the nonmovant unless
reasonable jurors could not. Mann Frankfort, 289 S.W.3d at 848. We indulge all
reasonable inferences and resolve any doubts in the nonmovant’s favor. See Joe v.
Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004) (citations omitted).
Analysis
In its motion for new trial and on appeal, BONYM contends a material fact
issue exists precluding summary judgment on the Rileys’ affirmative defense of
statute of limitations, specifically as to whether BONYM rescinded its prior
acceleration. BONYM points to the Rileys’ concession in their reply that they
received a letter regarding rescission of the acceleration. We agree that a material
fact issue exists precluding summary judgment on the Rileys’ affirmative defense of
Asserting that a claim is barred by the statute of limitations is an affirmative
defense. See Tex. R. Civ. P. 94. A party moving for summary judgment based on the
statute of limitations must establish as a matter of law that the limitations period
expired on the relevant claims. See Shah v. Moss, 67 S.W.3d 836, 842 (Tex. 2001)
(citation omitted). When the Rileys filed a cross-motion for summary judgment
based on limitations, they assumed the burden of conclusively proving the
9 affirmative defense. See id.; Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197
(Tex. 1995) (citations omitted).
“[A]bsent evidence of abandonment or a contrary agreement between the
parties, a clear and unequivocal notice of intent to accelerate and a notice of
acceleration is enough to conclusively establish acceleration and therefore accrual.”
Holy Cross, 44 S.W.3d at 565. Texas Civil Practice and Remedies Code § 16.035
governs real property foreclosure and outlines the requisite time periods. See Tex.
Civ. Prac. & Rem. Code Ann. § 16.035 (West 2002). The 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 within four years after the day the cause of action accrues. Id. § 16.035(b);
Holy Cross, 44 S.W.3d at 567. Upon expiration of this four-year period, the real-
property lien and power of sale to enforce the lien become void. Tex. Civ. Prac. &
Rem. Code Ann. § 16.035(d).
Texas Civil Practices and Remedies Code § 16.038 permits unilateral
rescission or waiver of acceleration by the lienholder.4 See id. § 16.038 (West Supp.
4 Cases governing this area of law refer to “waiver,” “abandonment,” and “rescission” of acceleration of a loan’s maturity date; this usage appears synonymous. Pitts v. Bank of New York Mellon Trust Co., 05-17-00859-CV, 2018 WL 6716933, at *3 n.2 (Tex. App.—Dallas Dec. 21, 2018, no pet.) (citing Tex. Civ. Prac. & Rem. Code Ann. § 16.038 (West Supp. 2018) (“Rescission or Waiver of Accelerated Maturity Date”)). 10 2018); Pitts v. Bank of N.Y. Mellon Trust Co., 05-17-00859-CV, 2018 WL 6716933,
at *3 (Tex. App.—Dallas Dec. 21, 2018, no pet.) (explaining that the noteholder
“may unilaterally abandon” acceleration). Written notice of rescission or waiver is
effective when deposited in the United States mail if it is sent by first class or
certified mail, postage prepaid and addressed to the debtor at the debtor’s last known
address. Id. § 16.038(b), (c). The method of waiver or rescission provided in section
16.038 is not exclusive. Id. § 16.038(e); Pitts, 2018 WL 6716933, at *3 (noting that
lienholder “may do so through other conduct that is inconsistent with acceleration
of the note”); see also Holy Cross, 44 S.W.3d at 566–67 (explaining that a noteholder
“can abandon acceleration if the holder continues to accept payments without
exacting any remedies available to it upon declared maturity”); Boren v. U.S. Nat’l
Bank Ass’n, 807 F.3d 99, 106 (5th Cir. 2015) (asserting that subsequent notices of
default stating the lienholder would accelerate the note conclusively established the
abandonment of the first notice of acceleration).
“‘If acceleration is abandoned before the limitations period expires, the note’s
original maturity date is restored and the noteholder is no longer required to foreclose
within four years from the date of acceleration.’” Bracken v. Wells Fargo Bank, N.A.,
No. 05-16-01334-CV, 2018 WL 1026268, at *3 (Tex. App.—Dallas Feb. 23, 2018,
pet. denied) (mem. op.) (quoting Leonard v. Ocwen Loan Servicing, L.L.C., 616 Fed.
11 App’x 677, 679 (5th Cir. 2015) (per curiam)); see also Bliss v. Bank of Am. N.A., 05-
18-00476-CV, 2019 WL 2353445, at *3 (Tex. App.—Dallas June 4, 2019, no pet.)
(mem. op.). Evidence of a lienholder’s rescission, waiver, or abandonment of
acceleration creates a fact issue defeating summary judgment on the affirmative
defense of limitations. See Nationstar Mortgage, LLC v. Landers, No. 12-17-00047-
CV, 2018 WL 1737013, at *7 (Tex. App.—Tyler Apr. 11, 2018, no pet.) (mem. op.);
see also Bracken, 2018 WL 1026268, at *5.
Although accrual is a legal question and whether a holder accelerated the note
is a fact question, the parties agree that BONYM accelerated the note on December
28, 2011, triggering accrual for a foreclosure cause of action. See Holy Cross, 44
S.W.3d at 568 (citations omitted) (“While accrual is a legal question, whether a
holder has accelerated a note is a fact question to which parties may, and in this case
did, agree.”). Here, the parties dispute whether BONYM rescinded the prior
acceleration. Despite its failure to timely produce evidence of its rescission,
BONYM contends it effectively rescinded the acceleration, and it points us to the
Rileys’ admission in their reply as being sufficient to create a fact issue.
We must first determine whether the Rileys’ reply was properly before the
trial court for the purposes of the summary judgment record. The record does not
establish that they requested leave to file additional evidence with their reply, which
12 included the additional affidavit acknowledging BONYM’s rescission of
acceleration and letter responding to the rescission of acceleration. Rule 166a(c)
imposes deadlines for filing summary judgment evidence. See Tex. R. Civ. P.
166a(c) (requiring the movant’s evidence be on file twenty-one days before the
hearing, and the non-movant’s evidence be filed at least seven days before the
hearing, except on leave of the trial court). Specifically, Rule 166a(c) provides that
“[e]xcept on leave of court, the adverse party, not later than seven days prior to the
day of the hearing may file and serve opposing affidavits or other written
response[,]” but it does not provide a deadline for the filing of a movant’s reply. See
id.; Shelton v. Sargent, 144 S.W.3d 113, 119 (Tex. App.—Fort Worth 2004, pet.
denied) (citations omitted). The rule directs that a trial court shall render judgment
if
the pleadings, admissions, affidavits, stipulations of the parties, and authenticated or certified public records, if any, on file at the time of the hearing, or filed thereafter and before judgment with permission of the court, show that, except as to the amount of damages, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion or in an answer or any other response.
Tex. R. Civ. P. 166a(c).
Although BONYM, as the adverse party to the Rileys’ cross-motion for
summary judgment, failed to present evidence within the time period allowed by the
13 rule for its response, the Rileys filed a reply prior to the hearing. Rule 166a(c)
required the Rileys, as the movants, to have their evidence on file at least twenty-
one days prior to the hearing absent leave of the trial court. See id. Even assuming
the trial court did not consider the additional evidence included with the Rileys’
reply, they filed their reply before the summary judgment hearing and made it part
of the record. 5 We conclude the Rileys’ reply was part of the summary judgment
record and properly before the trial court for consideration when it ruled on the
parties’ summary judgment motions.
Generally, a party’s pleadings do not constitute summary judgment evidence.
Khan v. GBAK Props., Inc., 371 S.W.3d 347, 356–57 (Tex. App.—Houston [1st
Dist.] 2012, no pet.) (citing Laidlaw Waste Sys. (Dallas), Inc. v. City of Wilmer, 904
S.W.2d 656, 660 (Tex. 1995)). However, when a party pleads facts which
affirmatively negate his cause of action, he may plead himself out of court. Id. at
5 The Rileys acknowledge that three “responses” were properly before the trial court and included their reply in those responses; however, they contend that because the trial court sustained their objection to BONYM’s late response, their reply became a nullity. We disagree and point to the cases that hold when the trial court strikes evidence of the moving party, the evidence submitted in response is “proper summary judgment evidence on which both parties could rely, and the trial court could consider [that] evidence in making its summary judgment ruling.” Callahan v. Vitesse Aviation Servs., LLC, 397 S.W.3d 342, 347 (Tex. App.—Dallas 2013, pet. denied) (citing Am. Bd. of Obstetrics & Gynecology, Inc. v. Yoonessi, 286 S.W.3d 624, 627 (Tex. App.—Dallas 2009, pet. denied)). 14 357 (citing Tex. Dep’t of Corr. v. Herring, 513 S.W.2d 6, 9 (Tex. 1974)). “In that
case, pleadings may be used as summary judgment evidence when they contain
statements rising to the level of judicially admitting a fact or conclusion which is
directly adverse to that party’s theory or defense of recovery.” Id. (citations omitted).
“Assertions of fact, not plead in the alternative, in the live pleadings of a party
are regarded as formal judicial admissions.” Hous. First Am. Sav. v. Musick, 650
S.W.2d 764, 767 (Tex. 1983); see also Holy Cross, 44 S.W.3d at 568. A clear and
unequivocal judicial admission has conclusive effect and bars the admitting party
from later disputing the admitted fact. Holy Cross, 44 S.W.3d at 568 (citing
Gevinson v. Manhattan Constr. Co., 449 S.W.2d 458, 467 (Tex. 1969)). “‘A judicial
admission results when a party makes a statement of fact which conclusively
disproves a right of recovery or defense he currently asserts.’” Khan, 371 S.W.3d at
357 (quoting Seminole Pipeline Co. v. Broad Leaf Partners, Inc., 979 S.W.2d 730,
740 (Tex. App.—Houston [14th Dist.] 1998, no pet.)); see also Landers, 2018 WL
1737013, at *4. Elements required to establish a judicial admission include:
(1) the statement must be made in the course of a judicial proceeding; (2) it must be contrary to an essential fact or defense asserted by the party; (3) it must be deliberate, clear, and unequivocal; (4) it cannot be destructive of the opposing party’s theory of recovery or defense; and (5) enforcing the statement as a judicial admission would be consistent with public policy.
Khan, 371 S.W.3d 347 at 357 (citation omitted). 15 In the present case, the Rileys’ statement made in their reply that “[BONYM]
argue[s] that the acceleration was abandon[ed] on December 28, 2015, which
allegedly restored the contract as such no acceleration occurred . . . after a search of
documents, defendant(s) concede plaintiff attempted an eleventh hour
abandonment” clearly qualifies as being in the course of a judicial proceeding. The
lienholder’s rescission of acceleration is contrary to the Rileys’ affirmative defense
of statute of limitations, and if true, fatal to their defense. The statement is clear and
deliberate, and while the Rileys’ use the word “attempted” in the statement, we
determine that in context, the statement is unequivocal. 6 They “concede” the
lienholder “attempted an eleventh hour rescission[,]” acknowledge they searched
documents, and mention the date by which the rescission had to occur. The statement
is not destructive of the opposing party’s theory, but instead supports BONYM’s
contention that the statute of limitations did not operate as a bar to its foreclosure in
this case. Enforcing the statement as a judicial admission is consistent with policy;
to do otherwise in this case would allow Appellees to prevail on an affirmative
defense when they have conceded a fact undermining that defense.
6 The Rileys do not contest that BONYM sent the rescission of acceleration or that it sent it on the date noted, rather their use of the word “attempted” in this case is indicative of their argument that the rescission of acceleration was unsuccessful because they detrimentally relied on the acceleration by renting another property. 16 We determine the Rileys’ reply filed the day before the summary judgment
hearing contained a judicial admission which, at a minimum, created a fact issue
precluding summary judgment based on the affirmative defense of statute of
limitations. We sustain BONYM’s first issue. We do not address its second and third
issues, as doing so would afford no greater relief on appeal. See Tex. R. App. P.
47.1.
Conclusion
We conclude the trial court erred by granting the Rileys’ cross-motion for
traditional summary judgment on its affirmative defense of statute of limitations
when a genuine issue of material fact exists regarding BONYM’s rescission of
acceleration. We reverse the judgment of the trial court and remand for further
proceedings consistent with this opinion.
REVERSED AND REMANDED.
_________________________ CHARLES KREGER Justice
Submitted on April 15, 2019 Opinion Delivered October 10, 2019
Before McKeithen, C.J., Kreger and Johnson, JJ.