Meachum v. Bank of New York Mellon Trust Co.

Case: 15-10237 Document: 00513337155 Page: 1 Date Filed: 01/11/2016

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-10237 FILED
January 11, 2016
Lyle W. Cayce
Clerk
H. WAYNE MEACHUM,

Plaintiff - Appellant

v.

THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., formerly
known as The Bank of New York Trust Company NA,

Defendant - Appellee

Appeal from the United States District Court
for the Northern District of Texas
USDC No. 3:13-CV-2322

Before PRADO, OWEN, and HAYNES, Circuit Judges.
PER CURIAM:*
H. Wayne Meachum appeals the district court’s denial of his motion for
summary judgment and the granting of summary judgment in favor of Bank
of New York Mellon Trust Company, N.A. (the “Bank”). The issue on appeal
is whether the district court erred in determining that the Bank abandoned
the prior acceleration of a home equity loan by requesting payment for less
than the full amount of the loan. For the reasons that follow, we AFFIRM.

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 15-10237

I. Background
In 2004, Meachum refinanced his mortgage with a home equity loan and
executed a promissory note with Homecomings Financial Network, Inc.
(“Homecomings”). He also executed a deed of trust securing the note, naming
Mortgage Electronic Registration Systems, Inc. (“MERS”) as the original
beneficiary and nominee for Homecomings. MERS assigned the note and deed
of trust to JPMorgan Chase Bank (“JPMorgan”). Both the note and the deed
of trust contained an acceleration clause.
Meachum defaulted on the loan and has not made a payment on it since
November of 2005. On November 17, 2005, JPMorgan sent Meachum a notice
of default and intent to accelerate. JPMorgan then accelerated the loan on
January 17, 2006 (the “2006 acceleration”). The following May, JPMorgan
initiated an expedited foreclosure proceeding pursuant to Rule 736 of the Texas
Rules of Civil Procedure in Texas state court. The court granted the order in
September of 2006 (the “2006 non-judicial foreclosure order”). The order stated
that JPMorgan or its successors “shall be allowed to proceed with foreclosure.”
Meachum then filed a lawsuit in state court attempting to prevent foreclosure
of his property, which was dismissed in November of 2007. After a series of
unsuccessful post-judgment filings and appeals, the lawsuit finally ended in
January of 2012.
During the pendency of the appeals process, JPMorgan and its successor,
the Bank, initiated other actions in an attempt to enforce the note and deed of
trust. On May 1, 2008, Meachum was sent a second notice of default for an
amount less than the full balance of the loan (the “2008 notice of default”). The
Bank then filed a Rule 736 application for foreclosure in state court on
December 19, 2008. Meachum attempted to prevent foreclosure by filing
another lawsuit on May 12, 2009, which was eventually dismissed for want of
prosecution.

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No. 15-10237

A similar pattern continued over the next few years until the Bank filed
another Rule 736 application on March 18, 2013, in an attempt to foreclose on
the property. Meachum responded by filing this suit in state court to prevent
a foreclosure sale on May 28, 2013, and the Bank removed the suit to federal
court on the basis of diversity jurisdiction. Meachum’s amended complaint
claimed, among other things, that because the Bank’s predecessor in interest
initially accelerated the loan more than four years prior in January of 2006,
the statute of limitations barred the Bank from foreclosing on the property.
Meachum and the Bank filed cross-motions for summary judgment. The
district court denied Meachum’s motion for summary judgment and granted
summary judgment in favor of the Bank. It held that the 2008 notice of default
sent to Meachum for an amount less than the full balance of the loan
represented an abandonment of the 2006 acceleration, and thus the Bank’s
right to foreclose was not barred by the statute of limitations. Meachum timely
appealed.
II. Standard of Review
We review a district court’s grant of summary judgment de novo. Young
v. Equifax Credit Info. Servs., Inc., 294 F.3d 631, 635 (5th Cir. 2002). Summary
judgment is proper “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
FED. R. CIV. P. 56(a).
III. Discussion
Meachum argues that the district court erred when it held that the 2008
notice of default represented an abandonment of the 2006 acceleration of the
loan. Thus, Meachum claims, the date of accrual began at the time of the 2006
acceleration, making the Bank’s attempt to foreclose in 2013 barred by the
statute of limitations. Meachum’s argument fails. Under § 16.035(a) of the
Texas Civil Practice and Remedies Code, a lender “must bring suit for . . . the

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No. 15-10237

foreclosure of a real property lien not later than four years after the day the
cause of action accrues.” If a note or deed of trust secured by real property has
an acceleration clause, 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, 566 (Tex. 2001). A lender can abandon its earlier acceleration
by “requesting payment on less than the full amount of the loan.” Boren v.
U.S. Nat’l Bank Ass’n, No. 14-20718, 807 F.3d 99, 2015 WL 6445721, at *4 (5th
Cir. Oct. 26, 2015) (quoting Leonard v. Ocwen Loan Serv., L.L.C., 616 F. App’x
677, 680 (5th Cir. 2015)). “‘Abandonment of acceleration has the effect of
restoring the contract to its original condition,’ thereby ‘restoring the note’s
original maturity date’ for purposes of accrual.” Id. at *3 (quoting Khan v.
GBAK Props., 371 S.W.3d 347, 353 (Tex. App.—Houston [1st Dist.] 2012, no
pet.)). Here, the 2008 notice of default sent to Meachum “request[ed] payment
on less than the full amount of the loan” and thus represented an abandonment
of the 2006 acceleration. See Boren, 2015 WL 6445721, at *4 (quoting Leonard,
616 F. App’x at 680). Thus, under Boren, the 2008 notice of default had the
effect of “‘restoring the note’s original maturity date’ for purposes of accrual.”
Id. at *3 (quoting Khan, 371 S.W.3d at 353).
Meachum tries to distinguish Boren by arguing that the Bank’s
predecessor actually obtained an order of foreclosure after initially
accelerating the note, such that any future attempts to abandon the
acceleration were ineffectual. This argument misapprehends the nature of a
Rule 736 order, which is merely an order “allowing the foreclosure of a [certain
kind of] lien.” TEX. R. CIV. P. 736.1(a). It is “not a substitute for a judgment
for judicial foreclosure.” TEX. R. CIV. P. 735.3. Indeed, a Rule 736 order
allowing a foreclosure to proceed “is without prejudice and has no res judicata,
collateral estoppel, estoppel by judgment, or other effect in any other judicial
proceeding.” TEX. R. CIV. P. 736.9. Thus, a lender may abandon acceleration

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even after receiving a non-judicial foreclosure order under Rule 736. 1 See
Biedryck v. U.S. Bank Nat’l Ass’n, No. 01-14-00017-CV, 2015 WL 2228447, at
*5 (Tex. App.—Houston [1st Dist.] May 12, 2015, no pet.) (describing Rule 736
as “merely provid[ing] a procedural device to obtain authorization to proceed
with the remedy of foreclosure”); see also Snowden v. Deutsche Bank Nat’l Tr.
Co., No. H-14-2963, 2015 WL 5123436, at *3 (S.D. Tex. Aug. 31, 2015) (citing
Biedryck, 2015 WL 2228447, at *5) (holding that a lender may abandon
acceleration even after obtaining a Rule 736 order allowing foreclosure). Under
the rule established in Boren, the Bank did in fact abandon acceleration by
requesting payment on less than the full amount of the loan. See 2015 WL
6445721, at *4. Accordingly, the four-year statute of limitations did not bar
the Bank’s 2013 attempt to foreclose.
AFFIRMED.

We express no opinion on the impact of a judicial foreclosure on a lender’s ability to
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abandon a prior acceleration.
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