ACCEPTED
03-15-00339-CV
8148372
THIRD COURT OF APPEALS
AUSTIN, TEXAS
12/8/2015 6:42:20 PM
JEFFREY D. KYLE
CLERK
NO. 03-15-00339-CV
FILED IN
IN THE THIRD COURT OF APPEALS 3rd COURT OF APPEALS
AT AUSTIN, TEXAS AUSTIN, TEXAS
12/8/2015 6:42:20 PM
JEFFREY D. KYLE
Clerk
BEN MELTON,
APPELLANT,
v.
CU MEMBERS MORTGAGE, A DIVISION OF COLONIAL SAVINGS,
F.A., FIRST WESTERN TITLE CO., AND BOB MIMS,
APPELLEES.
Appeal from the 340th Judicial District Court
Tom Green County, Texas
Trial Court Cause No. C130102
Hon. Jay Weatherby, Presiding
BRIEF OF APPELLEES CU MEMBERS MORTGAGE, A DIVISION OF
COLONIAL SAVINGS, FA AND FIRST AMERICAN TITLE CO.
Mark D. Cronenwett
SBN 00787303
Mackie Wolf Zientz & Mann, P.C.
14160 N. Dallas Parkway, Suite 900
Dallas, Texas 75254
(214) 635-2670 (Telephone)
(214) 635-2686 (Facsimile)
mcronenwett@mwzmlaw.com
Attorneys for Appellees CU Members
Mortgage, a Division of Colonial Savings,
FA and First American Title Co.
Oral Argument
Conditionally Requested
IDENTITY OF PARTIES AND COUNSEL
Appellees CU Members Mortgage, a Division of Colonial Savings, FA
(hereafter “Colonial”) and First American Title Co. (“First American”) (Colonial
and First American are hereafter referred to collectively as “Appellees”) agree with
Appellant Ben Melton’s (hereafter “Melton” or Appellant”) Identity of Parties and
Counsel, except to add that that there are two additional parties to this appeal, as
indicated below:
Appellees James C. Mosser and Mosser Law PLLC:
Counsel in the Court of Appeals:
James C. Mosser
SBN 00789784
Nicholas D. Mosser
SBN 24075405
Paul J. Downey
SBN 24080659
Mosser Law PLLC
2805 Dallas Parkway, Suite 220
Plano, Texas 75093
Counsel in the Trial Court:
James C. Mosser
SBN 00789784
Mosser Law PLLC
2805 Dallas Parkway, Suite 220
Plano, Texas 75093
ii
TABLE OF CONTENTS
Identity of Parties and Counsel ................................................................................. ii
Table of Contents ..................................................................................................... iii
Index of Authorities ..................................................................................................iv
Statement of the Case.............................................................................................. vii
Statement Regarding Oral Argument ..................................................................... vii
Statement of the Issues Presented .......................................................................... viii
Statement of the Facts ................................................................................................ 1
Summary of the Argument......................................................................................... 5
Standard of Review .................................................................................................... 5
Argument and Authorities.......................................................................................... 6
I. Summary judgment was warranted because Appellant failed to
exercise due diligence in serving his suit. ....................................................... 6
II. Four-year limitations period applies to Melton’s claims............................... 13
III. Colonial has standing as both Mortgage Servicer and Mortgagee of
Record. ........................................................................................................... 14
IV. Trial Court properly awarded attorney’s fees................................................ 17
Prayer ....................................................................................................................... 17
Certificate of Service ............................................................................................... 18
Certificate of Compliance with Rule 32(A)............................................................. 19
iii
INDEX OF AUTHORITIES
CASES
Boutari v. JP Morgan Chase Bank, NA, No. 5:09cv608, 2010 U.S.
Dist. LEXIS 144094, *35-36 (W.D. Tex., June 10, 2010), aff’d
429 Fed. Appx. 407 (5th Cir., June 20, 2011) ..................................................6
Broom v. MacMaster, 992 S.W.2d 659, 664-65 (Tex. App.—Dallas
1999, no pet.) .................................................................................................12
Farkas v. GMAC Mortg., LLC, 737 F.3d 338, 342 (5th Cir. 2013).........................16
Gant v. DeLeon, 786 S.W.2d 259, 260 (Tex. 1990) ..................................................8
Hoehn v. Dallas County Mental Health & Mental Retardation Ctr.,
No. 05-94-01515-CV, 1995 Tex. App. LEXIS 3406, 1995 WL
500271, at *3 (Tex. App.—Dallas Aug. 16, 1995, no writ) ..........................10
In re Estate of Hardesty, 449 S.W.3d 895, 911-12 (Tex. App.—
Texarkana 2014, no pet.) ...........................................................................6, 14
Johnson v. City of Fort Worth, No. 2-08-369-CV, 2009 Tex. App.
LEXIS 2124 *9 (Tex. App.—Fort Worth Mar. 26, 2009, no
pet.) ................................................................................................................11
Kyle v. Strasburger, No. 13-13-00609-CV, 2015 WL 7567523, *3-5,
2015 Tex. App. LEXIS 11984, *10-12 (Tex. App.—Corpus
Christi Nov. 25, 2015, no pet. h.) ..............................................................6, 14
Mauricio v. Castro, 287 S.W.3d 476, 478 (Tex. App.—Dallas 2009,
no pet.) .............................................................................................................9
McCord v. Dodds, 69 S.W.3d 230, 234 (Tex. App.—Corpus Christi
2001, pet denied) .............................................................................................9
Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 830 (Tex. 1990)...................7
Paredes v. City of Odessa, 128 F. Supp. 2d 1009, 1018 (W.D. Tex.
2000) ................................................................................................................7
Priester v. JP Morgan Chase Bank, N.A., 708 F.3d 667, 674 (5th Cir.
2013) ................................................................................................... 6, 12, 13
iv
Proulx v. Wells, 235 S.W.3d 213, 215 (Tex. 2007) ...................................................7
Puig v. Citibank, N.A., Civil Action No. 3:11-CV-0270-L, 2012 U.S.
Dist. LEXIS 70398, 2012 WL 1835721, at *15 (N.D. Tex. May
21, 2012) ........................................................................................................11
Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex.
1990) ..............................................................................................................16
Roberts v. Padre Island Brewing Co., 28 S.W.3d 618, 622 (Tex.
App.—Corpus Christi 2000, pet. denied .........................................................8
Rodriguez v. Tinsman & Houser, Inc., 13 S.W.3d 47 (Tex. App.—San
Antonio 1999, pet. denied) ..........................................................................8, 9
Santiago v. Novastar Mortg., Inc., 443 S.W.3d 462, 469-70 (Tex.
App.—Dallas 2014, pet. denied) ...............................................................6, 14
Schanzle v. JPMC Specialty Mortg. LLC, No. 03-09-00639-CV, 2011
WL 832170, *4, 2011 Tex. App. LEXIS 1748, *10-11 (Tex.
App.—Austin March 11, 2011, no pet.) ......................................................6, 7
Tapia v. CitiMortgage, Inc., No. A-14-CA-135-SS, 2014 U.S. Dist.
LEXIS 47624 *5-6 (W.D. Tex. Apr. 7, 2014)...............................................16
Valence Operating Co. v. Dorsett,
164 S.W.3d 656 (Tex. 2005) ...........................................................................5
Washmon v. Strickland, No. 03-08-00372-CV, 2010 Tex. App. LEXIS
1366, *6 (Tex. App.— Austin Feb. 26, 2010, no pet.) ........................... 14, 15
Wells Fargo Bank, N.A. v. Leath, 425 S.W.3d 525, 532 (Tex. App.—
Dallas 2014, pet. denied) ...............................................................................11
Williams v. Wachovia Mortg. Corp., 407 S.W.3d 391, 396-97 (Tex.
App.—Dallas 2013, pet. denied) ........................................................ 6, 12, 14
Wood v. HSBC Bank USA, N.A., 439 S.W.3d 585, 590-92 (Tex.
App.—Houston [14th Dist.] 2014, pet. pending) ......................................6, 14
STATUTES
TEX. BUS. & COM. CODE ANN. § 17.505(b) .............................................................11
v
TEX. BUS. & COM. CODE ANN. § 17.565 ....................................................................6
TEX. CIV. PRAC. & REM. CODE § 16.004(a)(4) ..........................................................6
TEX. CIV. PRAC. & REM. CODE § 16.051....................................................................5
TEX. CIV. PRAC. & REM. CODE ANN. § 74.051(c) ....................................................11
TEX. CONST. art. XVI, § 50(a)(6) .........................................................................9, 10
TEX. CONST. art. XVI, §50(a)(6)(Q)(x) ....................................................................11
TEX. PROP. CODE ANN. § 51.0001(4)(C)........................................................... 14, 15
TEX. PROP. CODE ANN. § 51.0025 ............................................................................13
RULES
TEX. R. CIV. P. 166 ....................................................................................................4
TEX. R. CIV. P. 166a(c) ..............................................................................................4
vi
STATEMENT OF THE CASE
Appellees agree with Appellant’s Statement of the Case.
STATEMENT REGARDING ORAL ARGUMENT
Oral argument is not warranted in this case. The judgment is premised on a
summary judgment involving limitations issues that have previously been resolved
by this Court and the other Texas appellate courts that have considered the issue.
Appellees do not believe that oral argument will significantly impact the decisional
process of the Court. If, however, the Court believes oral argument would be
helpful and oral argument is held, Appellees desire to participate therein.
vii
STATEMENT OF THE ISSUES PRESENTED
Issue 1. Summary judgment was warranted on Appellant’s claims because he
filed his lawsuit on the last day of the limitations but then waited sixty days to file
suit. As Appellant had no reason to wait for affecting service, he failed to exercise
due diligence as a matter of law.
Issue 2. Texas law is clear that a four-year limitations period applies to claims
for defects in the origination of a Texas home equity loan; therefore, Appellant’s
argument that no limitations period governs his claims is unfounded as a matter of
law.
Issue 3. Colonial has standing to pursue foreclosure of the subject home-
equity loan agreement as Colonial is both a Mortgage Servicer and a Mortgagee as
provided in the Texas Property Code.
Issue 4. The Trial Court properly awarded attorney’s fees.
viii
STATEMENT OF THE FACTS
This case involves a dispute over a loan taken out by Appellant Ben Melton
(hereafter “Melton” or “Appellant”) and secured by the equity in his primary
residence. On March 13, 2009, Melton signed and entered a Texas Home Equity
Note (Fixed Rate – First Lien) (the “Note”) for a $223,648.00 loan. CR at 71. On
that same date, he also signed a Texas Home Equity Security Instrument (First
Lien) (the “Security Instrument”) (the Note and Security Instrument will hereafter
be referred to collectively as the “Loan Agreement”) that secured the Note with a
lien on Melton’s residence located at 1969 Beaty Road, San Angelo, Texas 76904,
and more specifically described as:
LOT FOURTEEN-A (14-A), BLOCK ONE (1), OF SECTION TWO (2),
GROUP 1, LAKE NASWORTHY ADDITION TO THE CITY OF SAN
ANGELO, TOM GREEN COUNTY, TEXAS, ACCORDING TO THE
PLAT THEREOF RECORDED IN CABINET "E", SLIDE #167, OF THE
PLAT RECORDS OF TOM GREEN COUNTY, TEXAS (the “Property”).
CR at 78.
The original lender on the Note was Appellee CU Members Mortgage, a
Division of Colonial Savings, FA (hereafter “Colonial”). CR at 71. The Note was
later assigned to the Federal Home Loan Mortgage Corporation (“Freddie Mac”),
which retained Colonial as its Mortgage Servicer. CR at 64-66.
Four years to the day after Melton closed the Loan Agreement, a time in
which he was in default on his loan payments, he filed suit against Colonial,
1
among others, for alleged violations of the Texas Constitution in connection with
the origination of his loan. CR at 6. In particular, Melton alleged that article 16,
section 50(a)(6) of the Constitution was violated in the following respects: (a) that
Colonial failed to provide Melton with a Notice Concerning Extensions of Credit
within twelve days of the closing on his loan; (b) that Colonial closed Melton’s
home equity loan with a principal amount that exceeded an amount, when added to
the principal balances of all other liens, 80 percent of the fair market value of the
home; (c) that Colonial closed Melton’s home equity loan with recourse for
personal liability; (d) that Colonial required Melton to apply the proceeds of his
home equity loan to another debt not secured by his home; (e) that Colonial failed
to provide a copy of Melton’s final executed loan application and all executed
documents Melton signed at closing and failed to cure this notice obligation in a
timely manner; and (f) that Colonial failed to provide the true fair market value of
Melton’s home on the date the loan closed. CR 7-8. For these alleged loan-
origination defects, Melton brought a claim for a forfeiture of the Loan Agreement,
a claim Declaratory Judgment that the Loan Agreement was void ab initio, and a
claim for statutory fraud under Section 27.01 of the Texas Business and Commerce
Code. CR at 8-9.
In response, Appellees on May 31, 2013 filed their Original Answer,
wherein they generally denied Melton’s claims and, among other things, asserted
2
the defense of the Statute of Limitations. CR at 17. Appellees in their First
Amended Original Answer, filed on June 27, 2013, again asserted a general denial
and raised the defense of limitations. CR at 21.
On August 8, 2013, Colonial filed its counterclaim, seeking a judgment of
foreclosure on the Loan Agreement due to Melton’s default on his payment
obligations. CR at 37. On September 26, 2013, Appellees moved for summary
judgment on Melton’s affirmative claims, asserting that the Statute of Limitations
barred Melton’s claims for alleged defects in the origination of the Loan
Agreement because more than four years had passed from the date the loan closed
and Melton failed to exercise due diligence to effectuate service. CR at 49.
Colonial in its Motion for Summary Judgment also requested a judgment of
foreclosure.
At the time Appellees’ Motion for Summary Judgment was heard, Melton
had filed his Third Amended Original Petition, asserting the following claims for
alleged defects in the origination of his home-equity loan: (a) that Colonial failed
to provide Melton with a Notice Concerning Extensions of Credit within twelve
days of the closing on his loan; (b) that Colonial closed Melton’s home equity loan
with a principal amount that exceeded an amount, when added to the principal
balances of all other liens, 80 percent of the fair market value of the home; (c) that
Melton had no control over the appraiser that Colonial allegedly selected for the
3
appraisal; (d) that the appraisal was false and fraudulent; (e) that the appraiser used
and improper methodology in performing his valuation of the Property; (f) that
Colonial closed Melton’s home equity loan with recourse for personal liability; (g)
that Colonial required Melton to apply the proceeds of his home equity loan to
another debt not secured by his home; (h) that Colonial failed to provide a copy of
Melton’s final executed loan application and all executed documents Melton
signed at closing and failed to cure this notice obligation in a timely manner; (i)
that Colonial failed to provide the true fair market value of Melton’s home on the
date the loan closed; (j) that Colonial failed to pay promptly liens that had been
recorded on the Property and (k) Colonial improperly included a “lockout”
provision in the loan documents. CR at 219-20. For these alleged loan-origination
defects, Melton brought a claim for a forfeiture of the Loan Agreement, a claim
Declaratory Judgment that the Loan Agreement was void ab initio, and claims for
fraud, breach of contract and violations of the Texas Deceptive Trade Practices
Act. Id.
The Trial Court agreed with Appellees’ contentions and on July 14, 2014
granted their Motion for Summary Judgment. CR at 264. Colonial on December
8, 2014 filed a Motion for Award of Attorney’s Fees, which the Trial Court
granted on March 2, 2015. CR 267, 317.
4
SUMMARY OF THE ARGUMENT
Texas law clearly provides a four-year limitations period by which claims
for alleged defects in the origination of a Texas home-equity loan must be brought.
Appellant Ben Melton (“Melton” or “Appellant”) filed his suit on the very last day
of the limitations period, but then waited sixty days to serve his suit on Appellees.
Melton’s supposed justification for waiting to serve the suit is that, two before the
day that he filed, he also sent in a notice of defect letter to Appellees and he
wanted to see how, or whether, Appellee would respond. But wanting to submit
this notice letter does not provide any justification for waiting to file suit.
Therefore, Appellant failed to exercise due diligence as a matter of law and
Melton’s claims are thus barred by limitations.
STANDARD OF REVIEW
On appeal, this Court reviews the summary judgment motion and response
de novo to determine if the competent summary judgment evidence included with
those pleadings shows that there is no genuine issue as to any material fact and the
movant is entitled to summary judgment as a matter of law. See TEX. R.
CIV. P. 166a(c); Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.
2005).
5
ARGUMENT AND AUTHORITIES
I. Summary judgment was warranted because Appellant failed to exercise
due diligence in serving his suit.
The statute of limitations for a cause of action for violations of Article XVI
of the Texas Constitution is four years. TEX. CIV. PRAC. & REM. CODE Ann.
§16.051 (residual four-year limitations period); see Priester v. JP Morgan Chase
Bank, N.A., 708 F.3d 667, 674 (5th Cir. 2013); Boutari v. JP Morgan Chase Bank,
NA, No. 5:09cv608, 2010 U.S. Dist. LEXIS 144094, *35-36 (W.D. Tex., June 10,
2010), aff’d 429 Fed. Appx. 407 (5th Cir., June 20, 2011); Kyle v. Strasburger, No.
13-13-00609-CV, 2015 WL 7567523, *3-5, 2015 Tex. App. LEXIS 11984, *10-12
(Tex. App.—Corpus Christi Nov. 25, 2015, no pet. h.); In re Estate of Hardesty,
449 S.W.3d 895, 911-12 (Tex. App.—Texarkana 2014, no pet.); Wood v. HSBC
Bank USA, N.A., 439 S.W.3d 585, 590-92 (Tex. App.—Houston [14th Dist.] 2014,
pet. pending); Santiago v. Novastar Mortg., Inc., 443 S.W.3d 462, 469-70 (Tex.
App.—Dallas 2014, pet. denied); Williams v. Wachovia Mortg. Corp., 407 S.W.3d
391, 396-97 (Tex. App.—Dallas 2013, pet. denied); Schanzle v. JPMC Specialty
Mortg. LLC, No. 03-09-00639-CV, 2011 WL 832170, *4, 2011 Tex. App. LEXIS
1748, *10-11 (Tex. App.—Austin March 11, 2011, no pet.).
Melton’s claim for fraud is also governed by a four-year limitations period,
and his DTPA claim is governed by a two-year limitations period. TEX. BUS. &
COM. CODE ANN. § 17.565 (DTPA); TEX. CIV. PRAC. & REM. CODE § 16.004(a)(4)
6
(fraud). All of his claims accrued at the time of closing. See Schanzle, 2011 Tex.
App. LEXIS 1748, *10; Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d
834, 840 (Tex. App.—Dallas 2008, no pet.); see also Priester v. JP Morgan Chase
Bank, N.A., 708 F.3d 667, 675 (5th Cir. 2013).
Melton obtained the home equity loan at issue on March 13, 2009. CR at
75, 91. As such, Melton’s claims for violations of the Texas Constitution were
barred after March 13, 2013. Schanzle, 2011 WL 832170, *4. Melton did not file
his Original Petition until the day that the limitations period expired — March 13,
2013. CR at 6. Appellees, however, were not served with process until two months
later — May 13, 2013. CR at 13.
The timely filing of a lawsuit does not toll the statute of limitations unless
the plaintiff exercises due diligence in effecting service of citation upon the
defendant. Proulx v. Wells, 235 S.W.3d 213, 215 (Tex. 2007). Once the defendant
demonstrates that service was effectuated after the expiration of the limitations
period, the burden shifts to the plaintiff to explain the delay. Id. at 216 (citing
Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 830 (Tex. 1990)). Summary
judgment should be granted in favor of a defendant if it is shown that (1) defendant
was not served within the statute of limitations period and (2) as a matter of law,
plaintiff did not use due diligence in effectuating service. Paredes v. City of
Odessa, 128 F. Supp. 2d 1009, 1018 (W.D. Tex. 2000) (citing Gant v. DeLeon, 786
7
S.W.2d 259, 260 (Tex. 1990)). Lack of diligence in obtaining service on a
defendant exists as a matter of law if it is clear that the plaintiff did not “exhaust all
the alternatives available to achieve proper service.” Roberts v. Padre Island
Brewing Co., 28 S.W.3d 618, 622 (Tex. App.—Corpus Christi 2000, pet. denied).
Here, Melton failed to exercise due diligence because he waited two months
before doing anything to effectuate service. In Rodriguez v. Tinsman & Houser,
Inc., 13 S.W.3d 47 (Tex. App.—San Antonio 1999, pet. denied), the plaintiff filed
a legal malpractice suit on July 3, 1997 for a claim that accrued on July 14, 1995.
Under the applicable two-year statute of limitations, plaintiff was required to bring
suit no later than July 14, 1997. Id. at 49. Instead of serving her petition, the
plaintiff instructed the clerk not to issue citation for service and was going to notify
the defendant of the lawsuit through written correspondence and seek waiver of
citation. Id. at 48. Upon discovery that the correspondence was never sent, the
plaintiff requested issuance of citation on July 31, 1997 and defendant was served
on August 8, 1997. Id. The defendant was awarded summary judgment claiming
that the plaintiff’s claims were barred by the statute of limitations and the plaintiff
appealed. Id. at 49. The Fourth Court of Appeals held that the statute of
limitations was not tolled because plaintiff, as a matter of law, had not exercised
reasonable diligence in effectuating service as a matter of law. Id. at 51. The
Court reasoned that plaintiff’s inactivity in attempting service amounted to a lack
8
of diligence as a matter of law because there were no efforts from which to
evaluate plaintiff’s reasonableness as a diligent actor. Id.; see also Mauricio v.
Castro, 287 S.W.3d 476, 478 (Tex. App.—Dallas 2009, no pet.) (31 days with no
effort at service is a lack of due diligence at a matter of law); McCord v. Dodds, 69
S.W.3d 230, 234 (Tex. App.—Corpus Christi 2001, pet denied) (eight days).
Melton attempts to justify his delay in obtaining service by saying he
believed that he needed to wait for sixty days to pass after submitting his notice-of-
claim letter before serving the suit. Appellant’s Brief, p.11-12; see TEX. CONST.
art. XVI, §50(a)(6)(Q)(x)(allowing lender sixty days from receipt of notice of
defect to cure such defect). According to Melton, the submission of this notice
was “require[d]” apparently before filing suit. Id. at 12. Melton, however, is
mistaken. Nothing in Texas law requires that a notice-of-defect letter be sent prior
to the filing of a claim for home-equity origination defects. See TEX. CONST. art.
XVI, § 50(a)(6). 1
Unlike home-equity defect claims, there are other statutory schemes in
Texas that do require the submission of a notice of claim before the filing of suit,
but the only tolling allowed under those provisions is expressly stated in the
statute. See, e.g., TEX. CIV. PRAC. & REM. CODE ANN. § 74.051(c) (limitations
1
Of course, Melton in this case did not wait sixty days from the date he sent his notice of
claim before filing suit. He filed his suit two days after he submitted a Notice of Claim.
CR at 6 at 210, ¶26. He only waited to effect service.
9
period tolled for 75 days after submission of notice-of-claim letter in a medical-
malpractice case). And in other statutory schemes that call for a pre-suit notice-of-
claim letter, the statute does not provide for a tolling of limitations after the
submission of the claim, and therefore, limitations is not tolled. See TEX. BUS. &
COM. CODE ANN. § 17.505(b) (no tolling after submission of DTPA notice-of-
claim letter).
The home-equity origination defect claims filed by Melton in this suit fall in
the same category as DTPA claims. The plaintiff may submit a pre-suit notice-of-
claim, but whether or not the plaintiff submits the letter has no bearing on the
running of limitations on the plaintiff’s claims. Therefore, Melton has not
provided any justification for his delay in effecting service, and his supposed belief
that he needed to wait out the sixty-day period provided in TEX. CONST. art. XVI,
§50(a)(6)(Q)(x) is mistaken.
Furthermore, Melton’s supposed mistake does not provide him with a valid
reason for failing to timely serve the suit. See, e.g., Hoehn v. Dallas County
Mental Health & Mental Retardation Ctr., No. 05-94-01515-CV, 1995 Tex. App.
LEXIS 3406, 1995 WL 500271, at *3 (Tex. App.—Dallas Aug. 16, 1995, no writ)
(not designated for publication) (holding that plaintiff's explanation that she had
served wrong person because she mistakenly believed him to be proper agent for
government agency, in contravention of explicit statute in Texas Civil Practice and
10
Remedies Code providing correct agent for service, and her failure to learn of her
mistake for five months, did not raise fact question on due diligence and was not
consistent with due diligence); see also Johnson v. City of Fort Worth, No. 2-08-
369-CV, 2009 Tex. App. LEXIS 2124 *9 (Tex. App.—Fort Worth Mar. 26, 2009,
no pet.) (same).
Additionally, there is no support for Melton’s supposed belief that he had to
provide notice of his claim before suit was filed. Indeed, the case law holds that
the notice may be provided in a pleading, whether as an affirmative claim or in
response to a lender application for foreclosure under Texas Rule of Civil
Procedure 736. See Puig v. Citibank, N.A., Civil Action No. 3:11-CV-0270-L,
2012 U.S. Dist. LEXIS 70398, 2012 WL 1835721, at *15 (N.D. Tex. May 21,
2012) (notice of defect in borrower’s complaint); Wells Fargo Bank, N.A. v.
Leath, 425 S.W.3d 525, 532 (Tex. App.—Dallas 2014, pet. denied) (notice of
defect in borrower’s response to Rule 736 application for foreclosure).
Accordingly, Melton’s submission of a notice-of-defect letter was superfluous; he
could have simply relied upon his Original Petition in this suit to provide Colonial
was notice of his claim.
For the sake of accuracy, there was no mistake. Appellant’s justification for
waiting until after sixty days had expired before serving the lawsuit was, by his
own admission, nothing more than a strategy decision. He wanted to wait out the
11
sixty days to see whether or not Colonial would respond before serving his suit.
CR at 210, ¶29 (“The delay [in serving the suit] was to give Colonial time to
respond to my demand letter.”)2. The Dallas Court of Appeals considered a similar
issue where a medical-malpractice plaintiff, for strategic reasons, waited until the
deadline to remove a case to federal court had passed before effecting service on a
Texas hospital. Broom v. MacMaster, 992 S.W.2d 659, 664-65 (Tex. App.—
Dallas 1999, no pet.). The Court of Appeals held that the plaintiff’s strategic
reason for withholding service did not justify any delay in serving the suit. To
quote the Court:
Although a plaintiff may have good reasons for not wanting to seek
immediate service on a defendant, those reasons do not negate the
requirement that diligence be used in attempting service once the limitations
period has passed. Id.
In this case, Melton’s claims for violations of Article XVI of the Texas
Constitution concerning home equity loans are subject to a four-year statute of
limitations period which began to run from the date of the closing of the loan. See
Priester, 708 F.3d at 674; Williams, 2013 Tex. App. LEXIS 8638 at *14-15.
Melton filed his Petition on March 13, 2013, the four-year anniversary of the
closing date of his loan. CR at 6. However, Melton did not serve or attempt to
2
Melton in his Original Petition pled that “Defendant failed and refused to refund such amounts
… within a reasonable time, 60 days, after being notified of such failure in accordance with Tex.
Const. art. XVI, §50.” CR at 8, ¶12. By using the past tense in this allegation, Melton shows that
he strategically intended to wait for sixty days before serving the suit in the hope that no
response to his Notice of Defect letter would be provided.
12
serve Defendant with the Petition until May 13, 2013, two months after Melton
filed his petition. CR at 13. Melton’s inactivity on attempting service amounts to
lack of diligence as a matter of law. Thus, the four-year statute of limitations
period did not toll from the period Melton filed his Petition to the date Defendant
was served. Melton’s claims are barred by the statute of limitations and Defendant
is entitled to summary judgment. Alternatively, at least his claims under the
DTPA, which is governed by a two-year limitations period, are barred.
II. Four-year limitations period applies to Melton’s claims.
As the Fifth Circuit noted in Priester, origination defects in a home-equity
loan can, by express provision in the Texas Constitution, be cured and, therefore,
they are not void ab initio. Priester v. JP Morgan Chase Bank, N.A., 708 F.3d
667, 674 (5th Cir. 2013) (citing TEX. CONST. art. XVI, §50(a)(6)(Q)(x)). Because
those defects can be cured, claims seeking to declare a home-equity lien must
therefore be subject to a limitations period by which they need to be brought. Id.
As there is no express limitations period provided by Texas law for these claims,
then the residual limitation period of Section 16.051 of the Texas Civil Practice
and Remedies Code applies to these claims. Id.
All of the Texas intermediate appellate courts that have considered the issue
have all reached the same conclusion, namely, that because the alleged defects can
be cured, the subject liens are merely voidable and the residual limitations period
13
applies to those claim. Kyle v. Strasburger, No. 13-13-00609-CV, 2015 WL
7567523, *3-5, 2015 Tex. App. LEXIS 11984, *10-12 (Tex. App.—Corpus Christi
Nov. 25, 2015, no pet. h.); In re Estate of Hardesty, 449 S.W.3d 895, 909-12 (Tex.
App.—Texarkana 2014, no pet.); Wood v. HSBC Bank USA, N.A., 439 S.W.3d
585, 590-92 (Tex. App.—Houston [14th Dist.] 2014, pet. pending); Santiago v.
Novastar Mortg., Inc., 443 S.W.3d 462, 469-70 (Tex. App.—Dallas 2014, pet.
denied); Williams v. Wachovia Mortg. Corp., 407 S.W.3d 391, 396-97 (Tex.
App.—Dallas 2013, pet. denied).
As Texas law is clear that a four-year limitations period applies to Melton’s
claims, his second appellate issue should be overruled.
III. Colonial has standing as both Mortgage Servicer and Mortgagee of
Record.
Melton raises for the first time on appeal a question as to whether Colonial
has standing to prosecute its counterclaim for a judgment of foreclosure. There is
no question Colonial has standing.
As Melton, himself, acknowledges in his Brief, a mortgage servicer has
standing to prosecute a foreclosure action for the mortgage noteholder. See
Appellant’s Brief, p.23; see TEX. PROP. CODE ANN. § 51.0025; see also Washmon
v. Strickland, No. 03-08-00372-CV, 2010 Tex. App. LEXIS 1366, *6 (Tex. App.—
Austin Feb. 26, 2010, no pet.). Melton contends that the summary-judgment
14
record lacks evidence that Colonial was the last person to demand payments on the
loan, as provided in Section 51.0025.
This Court considered this very same issue in Washmon. Id., 2010 Tex.
App. LEXIS 1366, *6. In that case, summary judgment was granted in favor of the
lender. On appeal, the borrower argued that the lender had not proven that it was a
mortgage servicer, as defined in Section 51.0025, because it did not provide
summary-judgment evidence that it was the last person to demand payments. Id.
This Court affirmed, however, finding that the Notice of Default with Intent to
Accelerate in the summary-judgment record, which had been sent by the servicer
in that case, constituted conclusive proof that the appellee had proven it was the
mortgage servicer and thus had standing to pursue foreclosure. Id.
Here, the summary-judgment record contains the same Notice of Default
with Intent to Accelerate submitted by Colonial. CR at 96. Furthermore, the
summary-judgment record contains the payment history of the Loan Agreement
from Colonial, showing that it had received all payments on the loan from its
inception through the summary-judgment proceedings. CR at 151-155. These
facts support the uncontroverted affidavit testimony of Amily Sauceda, Assistant
Vice President of Colonial, that Colonial is the mortgage servicer for the subject
loan. CR at 64-65, ¶2. Melton presented no summary-judgment evidence to
controvert this proof. Ragsdale v. Progressive Voters League, 801 S.W.2d 880,
15
882 (Tex. 1990) (holding that clear and uncontroverted affidavit testimony from
interested witnesses present conclusive evidence). Therefore, Melton’s standing
challenge must fail.
A second basis for finding that Colonial has standing is that Colonial is the
last assignee of record according to the documents of record on file with the Tom
Green County Clerk. As provided in the Texas Property Code, a “mortgagee” can
be, among other things, “the last person to whom the security interest has been
assigned of record.” TEX. PROP. CODE ANN. § 51.0001(4)(C). The summary-
judgment record contains the last Assignment of Deed of Trust with respect to the
subject home-equity loan that was recorded with the Tom Green County Clerk.
CR at 94. This Assignment of Deed of Trust shows Colonial as the last beneficiary
of the Security Instrument. Under Texas law, the noteholder need not be the same
“mortgagee” as provided in Section 51.0001(4)(C). See Tapia v. CitiMortgage,
Inc., No. A-14-CA-135-SS, 2014 U.S. Dist. LEXIS 47624 *5-6 (W.D. Tex. Apr. 7,
2014). As Colonial is the last beneficiary of the Security Instrument of record3, it
is a “mortgagee” under Section 51.0001(4)(C) and thus has standing to pursue
foreclosure. Farkas v. GMAC Mortg., LLC, 737 F.3d 338, 342 (5th Cir. 2013)
(holding that “mortgagee” under Section 51.0001(4)(C) has standing to foreclose).
3
Melton acknowledges in his Appellant’s Brief that Colonial is the “mortgagee” as provided in
TEX. PROP. CODE ANN. § 51.0001(4)(C). See Appellant’s Brief, p.23.
16
IV. Trial Court properly awarded attorney’s fees.
As Melton’s appellate issues are all without merit, the Trial Court’s award of
attorney’s fees should be affirmed.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Appellees pray that the Trial
Court’s Judgment be in all things affirmed and that they be awarded all other relief
to which they may be entitled.
Respectfully submitted,
By: /s/ Mark D. Cronenwett
MARK D. CRONENWETT
Texas Bar No. 00787303
mcronenwett@mwzmlaw.com
MACKIE WOLF ZIENTZ &
MANN, PC
14160 N. Dallas Parkway, Suite 900
Dallas, Texas 75254
(214) 635-2650
(214) 635-2686 (Fax)
Attorneys for Appellees CU Members
Mortgage, a Division of Colonial
Savings, F.A. and First Western Title
Co.
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CERTIFICATE OF SERVICE
I hereby certify that on the 8th day of December, 2015, a true and correct
copy of the foregoing was served via the State’s electronic filing service to the
counsel of record listed below:
James C. Mosser
Nicholas D. Mosser
Paul J. Downey
Mosser Law PLLC
2805 Dallas Parkway, Suite 222
Plano, Texas 75093
courtdocuments@mosserlaw.com
COUNSEL FOR APPELLANTS JAMES C. MOSSER AND
MOSSER LAW PLLC
Larry W. Bale
Hay, Wittenburg, Davis, Caldwell & Bale, LLP
P O Box 271
San Angelo, Texas 76902-0271
lwb@hwdcb.com
COUNSEL FOR APPELLEE BOB MIMS
Gregory Sherwood
P.O. Box 200613
Austin, Texas 78720-0613
gsherwood@mail.com
COUNSEL FOR APPELLANT BEN MELTON
/s/ Mark D. Cronenwett___________
MARK D. CRONENWETT
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CERTIFICATE OF COMPLIANCE WITH RULE 9.4(i)(2)
This brief complies with the word-number limitation of TEX. R. APP. P.
9.4(i)(2) because this brief contains 4,158 words, excluding the parts of the brief
exempted by TEX. R. APP. P. 9.4(i)(2).
/s/ Mark D. Cronenwett
MARK D. CRONENWETT
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