PHH Mortgage Corporation, Successor by Merger to Ocwen Loan Servicing, LLC and Mortgage Electronic Systems. Inc. v. Tiffany Aston, as Trustee for the Polo Meadow Trust

Citation: Not availableDocket: 01-21-00057-CV

Court: Court of Appeals of Texas; July 12, 2022; Texas; State Appellate Court

Original Court Document: View Document

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On July 12, 2022, the Court of Appeals for the First District of Texas issued an opinion regarding the appeal by PHH Mortgage Corporation, as successor to Ocwen Loan Servicing, LLC, and Mortgage Electronic Registration Systems, Inc., against Tiffany Aston, trustee for the Polo Meadow Trust. The trial court had granted summary judgment in favor of Aston, declaring Ocwen's mortgage lien void based on the four-year statute of limitations for real property liens, and denied Ocwen's motion for summary judgment.

The background involves a 2005 deed of trust executed by Timothy and Sabrina Odom in favor of GMAC Mortgage Corporation. Ocwen became the successor beneficiary and loan servicer. After the Odoms defaulted on payments, Ocwen issued multiple delinquency notices and acceleration notices from 2014 to 2016, with the last acceleration notice in December 2016 rescinding all prior accelerations. Before a scheduled foreclosure sale in 2017, the Odoms sought a restraining order, and Aston intervened after acquiring the property through a junior lien foreclosure sale.

Aston contended that the statute of limitations barred Ocwen from foreclosing since the loan was first accelerated in 2014. Ocwen argued that its actions constituted rescission and abandonment of the prior accelerations, effectively resetting the statute of limitations in November 2016. The trial court ruled in favor of Aston, but the appellate court reversed this decision, agreeing with Ocwen that it had established its affirmative defenses, thus entitled to a take-nothing judgment against Aston's claims.

In cross-motions for summary judgment, each party must prove entitlement to judgment as a matter of law, with the reviewing court assessing all questions presented if one motion is granted and the other denied. Summary judgments are reviewed de novo. A traditional summary-judgment motion requires the movant to demonstrate no genuine issue of material fact exists and entitlement to judgment, per TEX. R. CIV. P. 166a(c). If the movant meets this burden, the nonmovant must raise a genuine issue of material fact to preclude summary judgment. A defendant asserting an affirmative defense must plead and prove it, and if successful, the burden shifts to the nonmovant. If the nonmovant fails to raise a genuine issue, the defendant conclusively establishes its affirmative defense.

In the case involving Ocwen and Aston, Ocwen contends the trial court erred in granting summary judgment for Aston regarding the statute of limitations, arguing it established affirmative defenses of rescission and abandonment by conduct. Both parties agree that Ocwen accelerated the loan in 2014 and that Aston met her burden regarding the statute of limitations barring Ocwen’s foreclosure. However, Ocwen claims its affirmative defenses should have negated Aston’s motion and entitled it to a take-nothing judgment.

The Texas Civil Practice and Remedies Code stipulates a four-year statute of limitations for real property liens, requiring foreclosure suits to be filed within four years from the cause of action's accrual date, generally the loan’s maturity date. If an optional acceleration clause exists, the cause of action accrues upon the lender’s exercise of that option. After four years, the lien and power of sale become void. A lender can reset the limitations period by abandoning the acceleration, which necessitates proving three elements: the existence of a right, actual knowledge of that right, and an intention to relinquish the right or conduct inconsistent with it.

Waiver is primarily a factual question, but it becomes a legal question when the relevant facts about a party's waiver of rights are undisputed. A lender can abandon the acceleration of a debt by sending a written notice of rescission via certified mail, as outlined in Section 16.038 of the Civil Practice and Remedies Code. Without an explicit notice of rescission, a lender may also demonstrate abandonment through actions, such as issuing a default notice that demands only past due amounts while indicating that failure to pay could lead to acceleration. 

Ocwen contends it provided sufficient evidence to prove the affirmative defenses of rescission and abandonment through its actions, arguing that the trial court incorrectly granted summary judgment to Aston regarding her statute-of-limitations claim. Ocwen asserts it rescinded prior accelerations of the debt with a certified mail notice, which demanded full payment but also explicitly stated that all previous acceleration notices were rescinded. This action reset the statute of limitations as if no acceleration had occurred, in accordance with Section 16.038. 

Aston challenges the validity of this rescission, claiming that the notice was misleading because it was titled "NOTICE OF ACCELERATION OF MATURITY," with the rescission language less prominently placed. However, Section 16.038 does not require specific wording for a notice to be effective, only that it be a written notice served by certified mail. Therefore, Ocwen's notice met the statutory requirements for rescission. Aston also argues that subsequent re-acceleration does not demonstrate abandonment of prior acceleration, citing case law. However, the cases she references are distinguishable from Ocwen's situation.

The lender's reliance on later notices of acceleration to demonstrate the abandonment of earlier accelerations is noted, emphasizing that those cases did not include a written rescission notice as presented here. Aston contends that Section 16.038 implies a necessary time lapse between rescission and re-acceleration, asserting that a simultaneous action violates the statute and undermines lenders’ rights to re-accelerate in the future. However, the court disagrees, stating that Section 16.038 does not specify any required interval between these actions and that adding such a requirement would be a judicial amendment of the statute. Aston's concerns about the potential for lenders to indefinitely rescind and re-accelerate, thereby avoiding limitations, are acknowledged but deemed unfounded, as the statute imposes a four-year limit on foreclosure following the loan's maturity date. The court asserts that simultaneous rescission and re-acceleration do not extend a lender's ability to foreclose beyond statutory limits. Aston's argument that borrowers would misunderstand simultaneous rescission and re-acceleration is rejected, as the language used was clear. Lastly, Aston's claims regarding legislative intent are dismissed, as the statute is found unambiguous, and the court adheres to its plain meaning without considering extrinsic evidence.

Ocwen demonstrated that it rescinded prior loan accelerations under Section 16.038, thereby resetting the statute of limitations. Aston failed to prove a genuine issue of material fact to challenge Ocwen's summary judgment on this matter. Ocwen argued that it abandoned prior accelerations through its actions, specifically by sending a delinquency notice to the Odoms on November 1, 2016. This notice indicated that the Odoms could cure their delinquency by paying less than the full loan amount and warned of potential fees and foreclosure, which Ocwen contended was inconsistent with its previous right to demand full repayment, thereby showing intent to abandon prior accelerations. Citing case law, Ocwen asserted that a lender could abandon an acceleration by issuing a notice that clearly indicates such intent. Aston countered that the notice merely reminded the Odoms of the reinstatement amount and did not express an unequivocal intent to abandon the prior accelerations.

However, previous rulings have found similar notices to constitute an unequivocal abandonment of acceleration. The Dallas Court of Appeals held that notices containing language about bringing a loan current with a partial payment, while warning of possible foreclosure, demonstrated inconsistency with acceleration and thus abandoned it. The delinquency notice to the Odoms specified that they must pay a certain amount to bring the loan current and provided options for financial counseling, further indicating an intent to abandon the previous accelerations. The absence of references to acceleration or foreclosure in the notice supports Ocwen's position.

Aston contends that the anti-waiver provisions in the deed of trust prevent Ocwen from abandoning its right to accelerate the loan. Section 9 stipulates that if Ocwen does not require immediate payment in full when circumstances allow, it does not forfeit its rights regarding future events. Section 11 similarly states that any forbearance by Ocwen does not waive its rights. Aston references Hardy v. Wells Fargo Bank to support her position, arguing that anti-waiver provisions disallow abandonment by a lender even when partial payments are accepted. However, the Hardy case differs as it involved specific reinstatement agreements where the lender's acceptance of payments did not affect the prior acceleration due to explicit terms in those agreements. The court in Hardy did not address whether anti-waiver provisions prevent abandonment of prior accelerations, a distinction recognized by other courts. Cases such as Pechua and Suniverse have similarly held that anti-waiver provisions do not prevent lenders from abandoning prior accelerations. Aston fails to present contrary authority to support her claims and attempts to differentiate two additional cases, Richardson and Merkle, both of which are also distinguishable. In Richardson, the lender's lack of action indicated no intent to abandon acceleration, while in Merkle, the deed's terms explicitly noted that accepting partial payments would not waive any rights, unlike the current deed of trust.

The court found that the lender's notice of acceleration explicitly stated that partial payments would not waive the right to accelerate the loan. The lender did not request partial payments after acceleration, only accepting them under conditions that maintained its rights. The court highlighted that anti-waiver provisions, like those in the deed of trust, do not prevent a lender from abandoning acceleration. Ocwen demonstrated through its actions that it abandoned prior accelerations, thus resetting the statute of limitations. Aston failed to prove a genuine issue of material fact to oppose summary judgment. As a result, the court concluded that Ocwen had rescinded all prior accelerations with its December 9, 2016, notice and abandoned them with its November 1, 2016, notice, meaning the four-year statute of limitations had not expired by the time the trial court granted summary judgment for Aston in October 2020. The court reversed the trial court's judgment that declared the mortgage lien void and enjoined Ocwen from foreclosure, instead ruling in favor of Ocwen, stating Aston takes nothing from her limitations-based claims. The decision was supported by Justices Kelly, Goodman, and Guerra.