BEAUMONT -- A Texas couple who had won their lawsuit against the Bank of New York Mellon in a foreclosure case was not as lucky in the Texas Ninth District Court of Appeals at Beaumont.
Justices Steve McKeithen and Leanne Johnson, along with Chief Justice Charles Kreger on Oct. 10 reversed a lower court’s ruling that had granted Sonia and Floyd Riley their motion for summary judgment in the foreclosure case. The lower court also denied the Bank of New York's motion for a new trial. Kreger wrote reversing the ruling, “We agree that a material fact issue exists precluding summary judgment on Rileys’ affirmative defense of limitations.”
Kreger noted that the Rileys used the idea that the Bank of New York's claim was outside the statute of limitations as their affirmative defense. The judges said that when the Rileys used this claim, they took on the responsibility of proving that it was actually valid.
In the case, the bank accelerated a note Dec. 28, 2011 for the loan the Rileys took out. While both sides agree on the date, there was a dispute of whether Bank of New York rescinded a previous acceleration. Kreger wrote, “Despite its failure to timely produce evidence of its rescission, BONYM contends it effectively rescinded the acceleration, and it points us to the Rileys’ admission in their reply as being sufficient to create a fact issue.”
The judges pointed out that even though the bank did not timely show evidence, the Rileys filed a reply before the summary judgment hearing, and Rule 166a(c) of the Tex. R. Civ. P.’s obligations for the couple is to present their evidence a minimum of 21 days before the hearing.
“Even assuming the trial court did not consider the additional evidence included with the Rileys’ reply, they filed their reply before the summary judgment hearing and made it part of the record,” Kreger wrote. Because of this, the judges ruled that the Rileys' reply was indeed a portion of the summary judgment record and was filed properly before the lower court for consideration when that court ruled on the summary judgment motions.
Ultimately, the appeals court ruled that the Rileys’ reply that was filed a day before the summary judgment hearing included a judicial admission, which creates a fact issue that would bar them from prevailing in their summary judgment motion.
The Rileys' history with the bank began shortly after they defaulted on a $104,000 home loan that they took out in 2004. A loan servicer issued a notice of default and an intent to accelerate the amounts due in August 2010.
Bank of New York Mellon was then assigned the note from Full Spectrum Lending in 2011. On Dec. 28 2011, a previous loan servicer issued a notice to the couple that it had decided to accelerate the maturity of the debt. But exactly four year later, the bank then issued a notice that rescinded the acceleration of the debt.
BONYM’s servicer subsequently sent another notice of default with an intent to accelerate Aug. 16, 2016. Bank of New York filed its first petition for foreclosure March 13, 2018. The Rileys filed a lawsuit in hopes of stopping the foreclosure in a separate district court. The trial court dismissed that case with prejudice due to the Rileys' request. The couple followed up by answering the current lawsuit and used statute of limitations as one of its affirmative defenses.
Bank of New York Mellon filed a traditional motion for summary judgment, and the Rileys pointed out that BONYM’s lawsuit was barred thanks to a four-year-statute of limitations. They used the Dec. 28, 2011, letter in an affidavit to show the timeline. They also filed their cross-motion for summary judgment.
The lower court ruled that Bank of New York Mellon's response to evidence was untimely and granted the couple’s cross motion for summary judgment. BONYM also requested a motion for a new trial which was denied, resulting in its appeal.