Case: 15-41104 Document: 00513390270 Page: 1 Date Filed: 02/22/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-41104 United States Court of Appeals
Summary Calendar Fifth Circuit
FILED
February 22, 2016
Lyle W. Cayce
Clerk
TIMOTHY MARTIN,
Plaintiff–Appellant,
versus
FEDERAL NATIONAL MORTGAGE ASSOCIATION,
Also Known as Fannie Mae,
Defendant–Appellee.
Appeal from the United States District Court
for the Eastern District of Texas
Before REAVLEY, SMITH, and HAYNES, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Timothy Martin appeals the dismissal of his suit to quiet title against
the Federal National Mortgage Association (“Fannie Mae”). There being no
error, we affirm.
Case: 15-41104 Document: 00513390270 Page: 2 Date Filed: 02/22/2016
No. 15-41104
I.
In July 2004, Martin borrowed $140,000, secured by a note and deed of
trust (“DOT”), to purchase a residence. The DOT named Mortgage Electronic
Registration Systems, Inc. (“MERS”), as the nominee of the lender, and Wells
Fargo Bank, N.A. (“Wells Fargo”), eventually acquired the note and DOT.
The DOT obligated Martin to make payments each month and gave
Wells Fargo the right to accelerate the obligation and foreclose in the event of
default. The DOT also contained certain non-waiver provisions:
12. Borrower Not Released; Forbearance By Lender Not a Waiver.
Extension of the time for payment or modification or amortization of
the sums secured by this [DOT] granted by Lender to Borrower or any
Successor in Interest of Borrower shall not operate to release the liabil-
ity of Borrower or any Successors in Interest of Borrower. . . . Any for-
bearance by Lender in exercising any right or remedy including, with-
out limitation, Lender’s acceptance of payments from third persons,
entities or Successors in Interest of Borrower or in amounts less than
the amount then due, shall not be a waiver of or preclude the exercise
of any right or remedy.
In December 2009, Martin informed Wells Fargo that he could not make
his monthly payment on time. Martin avers that a Wells Fargo representative
told him that making the December payment late “would not be a problem;
however the representative told him not to become three payments behind as
that would initiate possible foreclosure proceedings.” Martin made the Decem-
ber 2009 payment late but maintains he was current on later payments
through June 2011.
Martin returned to the house from a June vacation to find (1) that Wells
Fargo had returned his May and June mortgage payments without explana-
tion, (2) various mailings offering help to owners facing foreclosure, and
(3) that Wells Fargo had designated the property to be sold on July 5, 2011, at
a foreclosure sale. Wells Fargo sold the property to Fannie Mae at a foreclosure
2
Case: 15-41104 Document: 00513390270 Page: 3 Date Filed: 02/22/2016
No. 15-41104
sale on December 4, 2012, for $168,011.14.
II.
On July 1, 2011, Martin sued MERS in state court, alleging that MERS
was not the owner or holder of the note and that its beneficial interest was not
valid. Summary judgment was granted to MERS. In a second state suit, Mar-
tin sued Wells Fargo and other defendants, maintaining that Wells Fargo was
not entitled to foreclose and was not the owner and holder; he also challenged
the validity of the assignment from MERS to Wells Fargo and sought to enjoin
the foreclosure. The suit was dismissed with prejudice in February 2013.
In June 2013, Martin sued Fannie Mae in state court, and Fannie Mae
removed to the federal district court a quo. Martin does not assert that Fannie
Mae engaged in any wrongdoing. Instead, he seeks to quiet title on the ground
that Wells Fargo waived its right to foreclose by accepting payments for sixteen
months after the initial default, so it could not sell the property to Fannie Mae.
The district court dismissed Martin’s claim, and we affirm.
III.
Martin avers that the DOT’s non-waiver provisions do not apply because
he seeks only to have the note reinstated rather than to avoid liability under
the note. That notion is frivolous. By claiming that Wells Fargo had no right
to foreclose, Martin is attempting, at least implicitly, to escape liability for the
late payment he made in December 2009 and the payments he missed entirely
in May and June 2011. Obviously, the non-waiver provisions apply to his
claims.
Martin’s next theory begins uncontroversially: A party may waive cer-
tain contractual rights by acting in a manner inconsistent with the exercise of
those rights. See G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d
3
Case: 15-41104 Document: 00513390270 Page: 4 Date Filed: 02/22/2016
No. 15-41104
502, 511 (Tex. 2015). Wells Fargo, Martin claims, waived its right to accelerate
and foreclose by accepting his payments―for sixteen months after his initial
default before accelerating―and by failing to foreclose until almost three years
after default. Though precedent refutes his argument ab initio, 1 Martin offers
three of our recent decisions (two of them unpublished) 2 to support his conten-
tion. He misreads each of them.
In Boren, the homeowners maintained that limitations barred the bank’s
attempts to foreclose. After the borrowers’ default, the bank gave them notice
and accelerated the entire obligation under the loan. The parties filed dueling
petitions in foreclosure proceedings over the course of the next five years;
meanwhile, the bank sent the owners two more notices of default and acceler-
ation, representing that they could bring the loan current merely by making
their missed payments (instead of paying the entire obligation). The owners
eventually claimed that the four-year statute of limitations in Section 16.035
of the Texas Civil Practice & Remedies Code barred the bank’s right to fore-
close because more than four years had passed since it had first accelerated.
In rejecting that reasoning, we noted that the bank had “waive[d] its earlier
acceleration when it put[] the borrowers on notice of its abandonment . . . by
requesting payment on less than the full amount of the loan.” Boren, 807 F.3d
1 See Thompson v. Bank of Am. Nat’l Ass’n, 783 F.3d 1022, 1025–26 (5th Cir. 2015)
(holding that twelve postponements of a planned foreclosure did not waive right to foreclose
when DOT contained a non-waiver provision); Williams v. Wells Fargo Bank, N.A.,
560 F. App’x 233, 239–40 (5th Cir. 2014) (per curiam) (holding that extensions of time for
payment did not amount to waiver of right to accelerate and foreclose based on DOT’s non-
waiver provisions); Robinson v. Wells Fargo Bank, N.A., 576 F. App’x 358, 363–64 (5th Cir.
2014) (per curiam) (same).
2Boren v. U.S. Nat’l Bank Ass’n, 807 F.3d 99 (5th Cir. 2015); Leonard v. Ocwen Loan
Servicing, L.L.C., 616 F. App’x 677 (5th Cir. 2015) (per curiam); Rivera v. Bank of Am., N.A.,
607 F. App’x 358 (5th Cir. 2015) (per curiam).
4
Case: 15-41104 Document: 00513390270 Page: 5 Date Filed: 02/22/2016
No. 15-41104
at 106 (quoting Leonard, 616 F. App’x at 680). 3 Limitations began to run from
the most recent acceleration, not from the earlier accelerations the bank had
waived or abandoned. As relevant here, the request for payment of less than
the full obligation—after initially accelerating the entire obligation—was an
unequivocal expression of the bank’s intent to abandon or waive its initial
acceleration.
In Leonard, the bank made a mortgage loan that Saxon Mortgage Ser-
vices (“Saxon”) originally serviced. The owners defaulted and failed to cure,
prompting Saxon to send a notice of acceleration. Ocwen Loan Servicing
(“Ocwen”) then became the loan servicer and took no action on Saxon’s initial
notice of acceleration. Ocwen instead sent new notices of default and intent
to accelerate, which stated that the owners could bring the loan current by
making their missed payments (rather than the entire outstanding obligation).
The owners made no payments, so Ocwen sent a new notice of acceleration and
initiated foreclosure. The owners, like the owners in Boren, contended that
Section 16.035 barred the servicer’s right to foreclose. We rejected that theory,
reasoning that “a lender . . . put[s] the debtor on notice of its abandonment of
acceleration by requesting payment on less than the full amount of the loan.”
Leonard, 616 F. App’x at 680. As in Boren, the request for payment of less than
the full obligation following an initial acceleration of the entire obligation
amounted to waiver or abandonment of the acceleration.
In Rivera, the homeowners refinanced with a loan that Bank of America
(“BOA”) ultimately came to own. The owners defaulted, received BOA’s notice
3 We mentioned that Texas courts treat abandonment and waiver similarly in these
circumstances and that “[u]nder Texas law, the elements of waiver include: (1) an existing
right, benefit, or advantage held by a party; (2) the party’s actual knowledge of its existence;
and (3) the party’s actual intent to relinquish the right, or intentional conduct inconsistent
with the right.” Boren, 807 F.3d at 105 (quoting Thompson, 783 F.3d at 1025).
5
Case: 15-41104 Document: 00513390270 Page: 6 Date Filed: 02/22/2016
No. 15-41104
of intent to accelerate, filed for and received bankruptcy protection, and then
resumed making payments that BOA accepted. Id. BOA then sent another
notice of default and intent to accelerate the entire obligation. Two years
passed, then BOA, instead of accelerating, engaged the owners in negotiations
for a home-loan modification. The owners never cured, and the parties never
reached a modification agreement, so BOA accelerated and planned to fore-
close. We rejected the owners’ claim that Section 16.035’s four-year limita-
tions prohibited the right to foreclose because BOA “effectively abandoned its
prior acceleration . . . by accepting payments [two years later].” Id. at 361.
The lenders in Boren, Leonard, and Rivera accelerated loans before
accepting additional payments or representing that the borrowers could bring
the loans current by making payments less than the entire obligation. Accept-
ing a payment after acceleration could be intentional conduct inconsistent with
the acceleration that—in some circumstances—amounts to an abandonment
or waiver of the acceleration. See Rivera, 607 F. App’x at 361. Similarly, rep-
resenting to the mortgagor that payment of less than the entire obligation will
bring the loan current may amount to abandonment or waiver of the accelera-
tion as a manifestation of “actual intent to relinquish” it. Boren, 807 F.3d
at 105. We mention these possible arguments but do not decide them in dispos-
ing of Martin’s claim because Wells Fargo accepted payments only after his
default in 2009, not after the bank had accelerated the note. 4 Further, Wells
Fargo never represented that Martin could bring the note current by making
Martin also relies on the fact that foreclosure did not occur until almost three years
4
after his initial default. He ignores the fact that he litigated with MERS over the assignment
to Wells Fargo until October 2012 (only two months before the foreclosure) and was still liti-
gating against the bank when the foreclosure sale took place in December 2012. In any event,
the argument is irrelevant because the non-waiver provisions allowed Wells Fargo to delay
foreclosure without waiving any rights.
6
Case: 15-41104 Document: 00513390270 Page: 7 Date Filed: 02/22/2016
No. 15-41104
payments less than the entire outstanding obligation. These differences mat-
ter because the DOT’s non-waiver provisions allow Wells Fargo to accept pay-
ments less than the entire obligation or to defer acceleration and foreclosure
(and any other remedy) after default without waiving its rights. Wells Fargo
engaged only in conduct that was contemplated by the DOT’s non-waiver provi-
sions and thus was entirely consistent with its intent to preserve the right to
accelerate and foreclose. See Thompson, 783 F.3d at 1025–26. Martin failed
to allege any facts that would make his claim to relief plausible, so dismissal
was proper.
None of Martin’s theories has merit. The judgment of dismissal is
AFFIRMED.
7