Case: 16-20809 Document: 00514111230 Page: 1 Date Filed: 08/10/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 16-20809 August 10, 2017
Summary Calendar
Lyle W. Cayce
Clerk
KRYSTAL ONE ACQUISITIONS, L.L.C. A LIMITED LIABILITY
COMPANY,
Plaintiff - Appellant
v.
BANK OF AMERICA, N.A.,
Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:16-CV-1225
Before JOLLY, SMITH, and GRAVES, Circuit Judges.
PER CURIAM:*
This appeal arises from the district court’s summary judgment
recognizing the validity of a lender’s senior lien. We AFFIRM.
BACKGROUND
The parties each claim an interest in a home located in Houston, Texas.
In June 2000, Fred and Cathy Patterson signed a promissory note secured by
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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. 16-20809
a deed of trust for the property. Bank of America, N.A. (“Bank of America”)
now holds the secured promissory note.
Later, when the Pattersons defaulted on payments to a homeowners’
association, the association placed a subordinate lien on the property. Krystal
One Acquisitions, L.L.C. (“Krystal One”) purchased the home in 2015 after the
homeowners’ association foreclosed on its subordinate lien.
Krystal One filed a state-court action against Bank of America on April
4, 2016. In it, Krystal One sought a temporary restraining order prohibiting
Bank of America from foreclosing on its senior lien through a trustee’s sale
allegedly scheduled for April 5, 2016. Krystal One asserted that Bank of
America accelerated the promissory note more than four years before Krystal
One’s lawsuit, and therefore argued that Bank of America’s lien is time-barred
under Texas law.
Bank of America removed, and the district court granted summary
judgment in its favor.
DISCUSSION
As the district court correctly recognized, this case turns on whether
Bank of America accelerated the promissory note more than four years before
Krystal One’s lawsuit. Texas law provides a four-year statute of limitations for
foreclosure actions. See TEX. CIV. PRAC. & REM. CODE § 16.035(a). Because
the promissory note contained an optional acceleration provision, the
limitations period would only start to run if Bank of America “actually
exercise[d] its option to accelerate.” Boren v. U.S. Nat. Bank Ass’n, 807 F.3d
99, 104 (5th Cir. 2015) (quoting Holy Cross Church of God in Christ v. Wolf, 44
S.W.3d 562, 566 (Tex.2001)).
“To exercise [an acceleration] option, the holder must send ‘both a notice
of intent to accelerate and a notice of acceleration.’” Id. (quoting EMC Mortg.
Corp. v. Window Box Ass’n, Inc., 264 S.W.3d 331, 336 (Tex. App. 2008)). “Both
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notices must be ‘clear and unequivocal.’” Id. (quoting EMC Mortg. Corp., 264
S.W.3d at 336. “A proper notice of acceleration ‘in the absence of a contrary
agreement or waiver, cuts off the debtor's right to cure his default and gives
notice that the entire debt is due and payable.’” EMC Mortg. Corp., 264 S.W.3d
at 337 (quoting Ogden v. Gibraltar Sav. Ass’n., 640 S.W.2d 232, 234 (Tex.
1982)).
The summary judgment record contains a letter Bank of America sent to
the Pattersons on October 31, 2011. The letter stated Bank of America’s
intention to accelerate the loan unless the Pattersons paid missing
installments by December 5, 2011. Because the letter expressly recognized the
Pattersons’ right to cure their default and only demanded payment for the
portion of the loan already owing, it constituted only a notice of intent to
accelerate. See EMC Mortg. Corp., 264 S.W.3d at 337.
Krystal One presents no summary judgment evidence that Bank of
America sent the Pattersons a clear and unequivocal notice of acceleration, and
Bank of America accepted a partial payment from the Pattersons in January
2012. A notice of substitute trustee’s sale was issued on April 20, 2012, and a
line of cases from Texas’s intermediate appellate courts holds that a notice of
intent to accelerate followed by a notice of trustee’s sale unequivocally
indicates acceleration. See Karam v. Brown, 407 S.W.3d 464, 470 (Tex. App.
2013); see also Burney v. Citigroup Glob. Markets Realty Corp., 244 S.W.3d 900,
904 (Tex. App. 2008); Meadowbrook Gardens, Ltd. v. WMFMT Real Estate Ltd.
P'ship, 980 S.W.2d 916, 919 (Tex. App. 1998); McLemore v. Pac. Sw. Bank,
FSB, 872 S.W.2d 286, 292 (Tex. App. 1994). But we need not decide whether
the April 20, 2012 notice of substitute trustee’s sale triggered the accrual of
Bank of America’s foreclosure claim, because Krystal One filed the lawsuit
underlying this appeal on April 4, 2016. The foreclosure sale allegedly
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scheduled for April 5, 2016, would have fallen within the four-year statute of
limitations even if Bank of America’s claim accrued on April 20, 2012.
CONCLUSION
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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