We grant appellee's motion for rehearing in part, deny the motion in part, withdraw the memorandum opinion issued on December 15, 2016, and issue this substitute opinion.

This appeal arises out of a dispute between a property owner and a bank seeking to foreclose its lien on the property. The bank's assignor acquired the lien in a reverse-mortgage transaction. The borrower later died. After his death, the property was transferred. The property owner asserted that the statute of limitations barred the bank's foreclosure action. On appeal, the property owner asserts that the trial court erred in granting declaratory relief that the bank is entitled to foreclose based on a theory that the bank abandoned its purported acceleration of the promissory note, thereby resetting the accrual date for the claim. We conclude that the trial court erred in granting declaratory relief because the claim accrued when all outstanding principal, accrued interest, and other charges became immediately due and payable upon the borrower's death, without any ability of the creditor to accelerate the debt. We reverse the portions of the trial court's judgment in which the trial court granted declaratory relief and dismissed as moot the bank's alternative quantum-meruit claim, and we affirm the remainder of the judgment. We render judgment denying the bank's requests for declaratory judgment, and we remand the bank's quantum-meruit claim.

I. FACTUAL AND PROCEDURAL BACKGROUND

Patricia Siegel conveyed her interest in real property located at 11919 Cypress Park Drive, Houston, Texas (the "Property") to her husband, Irving Siegel, in July 2005, through a warranty deed. Irving obtained a reverse-mortgage loan in the amount of $273,079.50 from Financial Freedom Senior Funding Corporation ("Loan"). In connection with the Loan, Irving executed a promissory note in that amount ("Note"), secured by a Deed of Trust in which he granted a lien against the Property to Financial Freedom as security for repayment of the Note. Financial Freedom assigned the Note and Deed of Trust to appellee/defendant CIT Bank N.A., f/k/a OneWest Bank, N.A., f/k/a OneWest Bank, FSB ("CIT Bank"). Irving died in May 2008. Under the Note and Deed of Trust, all outstanding principal, accrued interest, and other charges became immediately due and payable when Irving died.

Upon Irving's death in May 2008, title to the Property vested in his wife Patricia. Several months later, in September 2008, Financial Freedom sent a notice to Irving's estate, stating that the entire amount of the debt was due and payable because of Irving's death. The debt was not paid. In February 2009, Financial Freedom sent a letter to Irving's estate stating its intention to foreclose its lien on the Property. Over a year later, Patricia deeded her interest in the Property to appellant/plaintiff Amy Powell. Powell has not paid any entity any amount owing on the Note, nor has she paid taxes on the Property or insured the Property at any time.

CIT Bank filed suit against Powell in June 2011, seeking a declaratory judgment to reform the legal description in the Deed of Trust due to mutual mistake and to divest Irving's estate and his heirs of right, title, and interest in the Property. Powell filed a counterclaim against CIT Bank. Nearly two years later, in May 2013, CIT Bank and Powell signed a mutual motion for nonsuit. In it, CIT Bank states that it "no longer desires to pursue its claims," and Powell states that Powell "no longer desires to pursue her claims for affirmative relief" against CIT Bank. A few months later, in July 2013, Powell filed suit in this case against CIT Bank seeking to enjoin CIT Bank from foreclosing on the Property in the future. CIT Bank filed a counterclaim, seeking a declaratory judgment that:

(1) the Loan is a valid and enforceable contract;

(2) CIT Bank performed all of its obligations under the Loan;

(3) Powell and/or her predecessor in title failed to perform all of her obligations under the Loan;

(4) Powell's failure to pay the taxes and insurance on the Property constitutes a material breach of the terms of the Loan;

(5) Powell has not discharged the total balance of the Loan;

(6) CIT Bank is entitled to foreclose the Deed of Trust and sell the Property at a non-judicial foreclosure sale upon providing proper notice; and

(7) upon foreclosure, CIT Bank is entitled to possession of the Property within thirty days after the sale if CIT Bank purchases the Property.

In the alternative, CIT Bank sought judicial foreclosure and a writ of possession or recovery based upon a quantum-meruit claim.

Following a bench trial, the trial court signed a judgment in which the court made the following declarations:

(1) The Note and Deed of Trust are valid and enforceable instruments.

(2) The Note and Deed of Trust are in default, due both to the death of Irving Siegel and to the nonpayment of taxes and insurance for each of the years from 2009 through 2015.

(3) CIT Bank is the current servicer of the Loan.

(4) CIT Bank is the current mortgagee of the Deed of Trust.

(5) CIT Bank is entitled to proceed with foreclosure through any process permitted by Texas law.

(6) CIT Bank has standing to proceed for foreclosure both as the mortgagee of the Deed of Trust and as the servicer of the Loan.

(7) CIT Bank's right to foreclose is not barred by the statute of limitations nor otherwise constrained by any other defense under law or equity.

In addition to granting CIT Bank declaratory relief, the trial court ruled that Powell take nothing on her request for permanent injunctive relief. The trial court dismissed as moot CIT Bank's quantum-meruit claim, as well as CIT Bank's other alternative claims.

II. ISSUES AND ANALYSIS

Powell does not specifically address which rulings she is challenging on appeal. She argues that the trial court erred in concluding that CIT Bank's potential future foreclosure claim is not time-barred. According to Powell, the statute of limitations bars the foreclosure claim. Liberally construing Powell's appellate brief, we conclude Powell is attacking the trial court's granting of declaratory relief. But, even if Powell's argument also could be construed as an attack on the trial court's denial of Powell's request for a permanent injunction, we conclude Powell cannot prevail on this point.

A. Permanent Injunction

A permanent injunction is appropriate if evidence shows: (1) the existence of a wrongful act, (2) the existence of imminent harm, (3) the existence of irreparable injury, and (4) the absence of an adequate remedy at law. See Wiese v. Healthlake Comm'n Ass'n, Inc., 384 S.W.3d 395, 399 (Tex. App.—Houston [14th Dist.] 2012, no pet.). Powell has not addressed any of these elements, nor has Powell cited any legal authority in support of the proposition that the trial court abused its discretion in denying her request for a permanent injunction. By failing to articulate any argument in this regard, Powell has waived any complaint as to the trial court's denial of her request for a permanent injunction. See San Saba Energy, L.P., 171 S.W.3d 323, 337 (Tex. App.—Houston [14th Dist.] 2005, no pet.). Accordingly, to the extent Powell asserts a challenge to the permanent injunction, we overrule it.

Having concluded Powell did not sufficiently brief an attack on the trial court's denial of her request for a permanent injunction, we need not address CIT Bank's arguments that granting Powell a permanent injunction would be inequitable.

B. Declaratory Judgment

We review declaratory judgments under the same standards as other judgments. See Van Dam v. Lewis, 307 S.W.3d 336, 339 (Tex. App.—San Antonio 2009, no pet.). We employ the same rules for interpreting a note that we use to interpret a contract. Financial Freedom Sr. Funding Corp. v. Horrocks, 294 S.W.3d 749, 753 (Tex. App.—Houston [14th Dist.] 2009, no pet.). In construing a contract, our primary concern is to ascertain and give effect to the intentions of the parties as expressed in the contract. Kelley-Coppedge, Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1989). To ascertain the parties' intentions, we examine the entire agreement in an effort to harmonize and give effect to all provisions of the contract so that none will be rendered meaningless. MCI Telecomms. Corp. v. Tex. Utilis. Elec. Co., 995 S.W.2d 647, 652 (Tex. 1999). We give contract terms their plain, ordinary, and generally accepted meanings unless the contract itself shows them to be used in a technical or different sense. Horrocks, 294 S.W.3d at 753.

1. Accrual of Claim and Statute of Limitations

A person must bring suit for the recovery of real property under a real-property lien or the foreclosure of a real-property lien not later than four years after the day the claim accrues. Tex. Civ. Prac. & Rem. Code Ann. § 16.035(a) (West, Westlaw through 2015 R.S.). A sale of real property under a power of sale in a mortgage or deed of trust that creates a real-property lien must be made not later than four years after the day the claim accrues. Tex. Civ. Prac. & Rem. Code Ann. § 16.035(b) (West, Westlaw through 2015 R.S.); Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 567 (Tex. 2001). When the four-year limitations period expires, the real-property lien and the power of sale to enforce the lien become void. Tex. Civ. Prac. & Rem. Code Ann. § 16.035(d) (West, Westlaw through 2015 R.S.); Holy Cross, 44 S.W.3d at 567. Generally, if a note secured by a real-property lien is payable in installments, the statute of limitations does not begin to run until the maturity date of the last installment. Tex. Civ. Prac. & Rem. Code Ann. § 16.035(e) (West, Westlaw through 2015 R.S.); Holy Cross, 44 S.W.3d at 566. If a note or deed of trust contains an optional acceleration clause and the holder exercises its option to accelerate, the claim accrues when the holder actually exercises the option to accelerate. Tex. Civ. Prac. & Rem. Code Ann. §16.035(e); Holy Cross, 44 S.W.3d at 566.

Powell asserts that the limitations period began to run on May 8, 2008, the date Irving died, and ended four years later on May 8, 2012. Paragraph three of the Note, entitled "Payment," provides: "I will pay principal and interest when an event described in Section 7 occurs." The Note provides in section 7(A) that, "All outstanding principal, accrued interest, and other charges shall be immediately due and payable if (i) all Borrowers die, or (ii) the Property is sold or otherwise transferred." Section 7(G) provides that if an event described by section 7(A) occurs, "the Note Holder will send me a written notice, as required by applicable law, telling me that I am required to pay immediately the full amount of principal, interest, and other charges I owe under this Note." The Deed of Trust provides that "[a]ll sums secured by this Security Instrument shall be immediately due and payable if . . . all Borrowers die."

Under the unambiguous language of the non-recourse, reverse-mortgage Note, no payments are due until an event described in section 7 occurs, and when such an event occurs, all outstanding principal, accrued interest, and other charges become immediately due and payable. Thus, the Note does not provide for installment payments whose maturity date may be accelerated. Neither the Note nor the Deed of Trust contains a clause giving the creditor the option of accelerating the indebtedness in the event that the sole borrower dies. Instead, under the plain terms of the Note and the Deed of Trust, all outstanding principal, accrued interest, and other charges under the Note and all sums secured by the Deed of Trust became immediately due and payable on May 8, 2008, when Irving — the only borrower under the Note — died. See Horrocks, 294 S.W.3d at 754 (noting that case involving note with acceleration clause was not on point because the reverse-mortgage notes at issue in Horrocks did not provide for repayment through periodic installments or for acceleration in the event of default). As Financial Freedom stated in the September 4, 2008 notice that it sent to the Estate of Irving Siegel, "[u]pon the occurrence of a maturity event, of which the borrower's passing is one, the loan becomes due and payable."

In its motion for rehearing, CIT Bank asserts that this court's analysis centers on the fact that acceleration of the debt was mandatory upon the death of the borrower. In this statement, CIT Bank mischaracterizes the terms of the Note. The Note does not provide for any acceleration of the debt upon the death of the borrower; rather, all outstanding principal, accrued interest, and other charges under the Note became immediately due and payable on May 8, 2008, when the only borrower under the Note died.

In an attempt to satisfy the requirements of article XVI, section 50(a)(7) of the Texas Constitution, the drafters of the Note included a provision that if the sole borrower dies, the holder of the Note is required to send a written notice that the full amount of principal, accrued interest, and other charges under the Note have become immediately due and payable. See Tex. Const. art. XVI, § 50(a)(7). Though the four-year limitations period to enforce the lien began running on May 8, 2008, rather than on the date of this notice, Financial Freedom sent this notice on September 4, 2008, more than four years before this lawsuit was filed in the trial court.

2. Alleged Abandonment of Acceleration

CIT Bank filed its first suit within the statute of limitations. But, CIT Bank nonsuited. Powell then filed this lawsuit in July 2013, more than four years after the statute of limitations began running. CIT Bank did not file its counterclaim until September 2015. CIT Bank asserts that the statute of limitations was tolled because CIT Bank abandoned its acceleration of the Note. As discussed above, all outstanding principal, accrued interest, and other charges under the Note and all sums secured by the Deed of Trust became immediately due and payable on May 8, 2008, and neither CIT Bank nor any of its predecessors in interest had the option of accelerating the indebtedness in the event that the sole borrower died. Because neither CIT Bank nor its predecessors accelerated the Note, none of these entities could abandon an acceleration of the Note. See id. Therefore, the trial evidence proved as a matter of law that neither CIT Bank nor its predecessors could have avoided the bar of the statute of limitations by abandoning the acceleration of the Note.

CIT Bank argues that it could have abandoned the "acceleration" of the Note and that CIT Bank did abandon acceleration when CIT Bank and Powell signed and filed the mutual motion for nonsuit in the prior lawsuit. Though neither CIT Bank nor its predecessors could abandon an acceleration of the Note, even presuming for the sake of argument that CIT Bank could have abandoned acceleration, the trial evidence is legally insufficient to support the trial court's conclusion that the filing of the mutual motion for nonsuit effected an abandonment of the Note's acceleration with the consent of Powell and CIT Bank. See Residential Credit Solutions v. Burg, No. 01-15-00067-CV, 2016 WL 3162205, at *3-5 (Tex. App.—Houston [1st Dist.] Jun. 2, 2016, no pet.) (mem. op.). In the mutual motion for nonsuit, CIT Bank stated that it no longer desired to pursue its claims against Powell and requested the court to sign an order "nonsuiting" these claims without prejudice, and Powell stated that she no longer desired to pursue her claims against CIT Bank and requested the court to sign an order "nonsuiting" these claims without prejudice. The dismissal without prejudice of these claims returned the parties to the positions they occupied before any suit was filed, as if the first suit had never existed. See Cunningham v. Fox, 879 S.W.2d 210, 212 (Tex. App.—Houston [14th Dist.] 1994, writ denied). By joining and agreeing to this motion neither CIT Bank nor Powell agreed that any alleged acceleration of the amounts due and owing under the Note would be abandoned. Each party agreed to nonsuit without prejudice the party's claims for affirmative relief.

CIT Bank cites Denbina v. City of Hurst for the proposition that nonsuiting a foreclosure action constitutes an abandonment of acceleration. See 516 S.W.2d 460 (Tex. App.—Tyler 1974, no writ). The Denbina court did not hold that a nonsuit of a foreclosure action necessarily constitutes an abandonment of acceleration. See id. at 462-63. Rather, the Denbina court concluded that the City of Hurst exercised its option to accelerate the assessment obligation by means of its counterclaim in the first suit and that the City withdrew or abandoned its decision to accelerate by nonsuiting this counterclaim. See id. Because that fact pattern is not present in today's case, Denbina is not on point. See id.

CIT Bank appears to argue that the mutual motion for nonsuit must be an abandonment of acceleration because the parties agreed that each nonsuit would be "without prejudice" and because, if the motion is not an abandonment of acceleration, the dismissal would be "with prejudice." Any such argument misconstrues the meaning of a voluntary dismissal without prejudice. The "without prejudice" denomination means that the dismissal of the claims does not prevent the re-filing of the claims; it does not mean that the pendency of the first suit tolled the statute of limitations as to a later suit or that any other party in the case waived any defenses to the voluntarily dismissed claims. See id.; Hammonds v. Texas Dept. of Criminal Justice, No. 04-11-00009-CV, 2011 WL 3610406, at *1-2 (Tex. App.—San Antonio Aug. 17, 2011, no pet.) (mem. op.).

Because the four-year limitations period expired before Powell filed this lawsuit in July 2013, the real-property lien and the power of sale to enforce the lien became unenforceable. Tex. Civ. Prac. & Rem. Code Ann. § 16.035(d). And, because CIT Bank's power to enforce the lien is unenforceable, the trial court erred in granting CIT Bank declaratory relief. See id. Therefore, we sustain Powell's issue challenging the trial court's declarations, reverse the portion of the trial court's judgment granting CIT Bank declaratory relief, and render judgment denying CIT Bank's requests for declaratory relief.

In its motion for rehearing, CIT Bank asserts that it had the right to extend the maturity date of the debt. Presuming for the sake of argument that CIT Bank had this right, the trial evidence is legally insufficient to support a finding that CIT Bank extended the maturity date of outstanding principal, accrued interest, and other charges due and payable under the Note on May 8, 2008, the date the sole borrower died.

In its motion for rehearing, CIT Bank argues that this court's rulings are inconsistent because, after concluding that Powell failed to sufficiently brief a challenge to the trial court's denial of her request for a permanent injunction, this court then holds that CIT Bank is permanently enjoined from foreclosing on its lien. This argument is based on a false premise. This court does not hold that CIT Bank is permanently enjoined from foreclosing on its lien; rather, this court concludes that the trial court erred in granting CIT Bank declaratory relief because the limitations period has expired and because the real-property lien and the power of sale to enforce the lien have become unenforceable.

C. Quantum-Meruit Claim

In the trial court, CIT Bank asserted, in the alternative, a quantum-meruit claim, seeking to recover from Powell more than $83,000 that CIT Bank advanced for taxes and insurance on the Property, plus reasonable attorney's fees, prejudgment and postjudgment interest, and costs of court. In its final judgment, the trial court granted CIT Bank declaratory relief and dismissed its alternative quantum-meruit claim as moot. In its appellee's brief, CIT Bank did not request any relief regarding the quantum-meruit claim in the event that this court were to reverse the trial court's judgment granting declaratory relief. In our opinion on original submission, we did not remand the quantum-meruit claim to the trial court. In its motion for rehearing, CIT Bank asserts that, unless this court changes its judgment reversing the trial court's granting of declaratory relief, the quantum- meruit claim no longer is moot and should be remanded to the trial court. We conclude that CIT Bank is not procedurally barred from asserting this argument in its motion for rehearing, even though CIT Bank did not file a notice of appeal and even though CIT Bank did not raise this point on original submission. See Chesshir v. First State Bank, 620 S.W.2d 101, 101-02 (Tex. 1981) (per curiam). Under the trial court's judgment, CIT Bank received relief it had requested on its primary claim, and CIT Bank apparently had no issue with the alternative quantum-meruit claim being dismissed as moot. Once this court reversed the trial court's judgment as to CIT Bank's primary claim, the trial court's basis for dismissing the quantum-meruit claim as moot disappeared, and CIT Bank was free to assert on rehearing that the quantum-meruit claim should be remanded to the trial court. See id.

In light of our reversal of the trial court's judgment granting CIT Bank declaratory relief and our rendition of judgment denying CIT Bank's requests for declaratory relief, the basis for the trial court's mootness determination as to the quantum-meruit claim is no longer present. We thus conclude that we should reverse the trial court's judgment dismissing the quantum-meruit claim as moot and remand the quantum-meruit claim to the trial court for further proceedings. We grant CIT Bank's motion for rehearing to the extent CIT Bank seeks a remand of the quantum-meruit claim, and we deny the remainder of the motion.

We make no comment whatsoever on the merits of the quantum-meruit claim. It is for the trial court to determine on remand whether CIT Bank may recover under its quantum-meruit claim, and, if so, to what extent.

III. CONCLUSION

The trial evidence proved as a matter of law that the claim for foreclosure of the lien in the Property under the Deed of Trust and the claim for sale of the Property under the power of sale in the Deed of Trust accrued on May 8, 2008, when Irving died, more than four years before Powell filed this suit and CIT Bank filed its counterclaim. The trial evidence also proved as a matter of law that, because the four-year limitations periods under subsections (a) and (b) of Civil Practice and Remedies Code section 16.035 expired before Powell filed this lawsuit, the real-property lien and the power of sale to enforce the lien became unenforceable before Powell filed this lawsuit. Thus, the trial court erred in granting CIT Bank declaratory relief. We reverse the portions of the trial court's judgment in which the trial court grants CIT Bank declaratory relief and in which the trial court dismisses as moot the quantum-meruit claim; we render judgment denying CIT Bank's requests for declaratory relief, remand the quantum-meruit claim to the trial court for further proceedings, and affirm the remainder of the trial court's judgment.

/s/ Kem Thompson Frost

Chief Justice Panel consists of Chief Justice Frost and Justices Boyce and Christopher.

Powell v. Cit Bank, N.A.

Summary

Opinion

I. FACTUAL AND PROCEDURAL BACKGROUND

II. ISSUES AND ANALYSIS

III. CONCLUSION

Powell v. Cit Bank, N.A.

Powell v. Cit Bank, N.A.

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Powell v. Cit Bank, N.A.

Summary

Opinion

I. FACTUAL AND PROCEDURAL BACKGROUND

II. ISSUES AND ANALYSIS

III. CONCLUSION

Powell v. Cit Bank, N.A.

Powell v. Cit Bank, N.A.

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