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Wells Fargo Bank, N.A. v. Washington

Court of Appeals of Louisiana, Fourth Circuit

October 23, 2019

WELLS FARGO BANK, N.A., AS TRUSTEE FOR OPTION ONE MORTGAGE LOAN TRUST 2000-C, ASSET-BACKED CERTIFICATES, SERIES 2000-C
v.
TRACIE WASHINGTON

          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2010-02155, DIVISION "L" Honorable Kern A. Reese, Judge

          STEPHEN RIDER -and- ZELMA M. FREDERICK McGLINCHEY STAFFORD, PLLC COUNSEL FOR PLAINTIFF/APPELLANT

          DONALD L. HYATT, II DONALD L. HYATT, II APLC COUNSEL FOR DEFENDANT/APPELLEE

          (Court composed of Chief Judge James F. McKay III, Judge Daniel L. Dysart, Judge Joy Cossich Lobrano)

          JAMES F. MCKAY III CHIEF JUDGE.

         In this action on a petition to enforce security interests by ordinary process, the plaintiff, Wells Fargo Bank, N.A., as trustee for Option One Mortgage Loan Trust 2000-C, Asset-Backed Certificates, Series 2000-C (Wells Fargo), appeals the trial court's granting of a peremptory exception of prescription in favor of the defendant, Tracie Washington. For the reasons that follow, we affirm.

         FACTS AND PROCEDURAL HISTORY

         On June 26, 2000, Ms. Washington obtained a mortgage for her home located at 8004 Belfast Street in New Orleans, Louisiana. Ms. Washington executed a promissory note for $140, 000.00 payable to Bourgeois & Associates Mortgage, L.L.C. and granted a mortgage encumbering the property.[1] The loan was subsequently assigned to Option One, which later assigned the loan to Wells Fargo.

         Ms. Washington failed to make the monthly installment payment due on November 1, 2001 or any other payment due thereafter. On February 11, 2002, Wells Fargo filed a petition for executory process, where the unpaid principal balance and interest due was then accelerated under the note.[2] This foreclosure lawsuit was dismissed, without prejudice, after the parties reached a settlement as to the arrears owed by Ms. Washington.

         On December 16, 2003, a second petition for executory process was filed.[3]As in the first lawsuit, Wells Fargo again accelerated the debt because, as of September 1, 2003, Ms. Washington again failed to pay the full monthly installments on her mortgage loan obligations. This foreclosure lawsuit was also dismissed without prejudice on May 9, 2007.[4]

         On March 4, 2010, Wells Fargo filed the instant suit via a petition to enforce security interest by ordinary process. In response, Ms. Washington filed an answer, exceptions, alternative affirmative defenses, and a reconventional demand on September 16, 2010. On March 24, 2016, Ms. Washington filed an amended answer, alternative affirmative defenses, and reconventional demand. On May 22, 2018, Ms. Washington filed an exception of prescription, which was heard by the trial court on November 29, 2018. Ms. Washington argued that in cases involving more than one lawsuit over a note which is accelerated in the first case, any subsequent case is prescribed if it is brought more than five years after the initial acceleration. Both sides also put on competing evidence as to whether or not Ms. Washington acknowledged the debt. The trial court ruled from the bench and later memorialized a judgment on February 8, 2019, granting Ms. Washington's exception of prescription. It is from this judgment that Wells Fargo now appeals.

         DISCUSSION

         On appeal, Wells Fargo raises the following assignment of error: the trial court erred in granting Washington's exception of prescription because Washington acknowledged the mortgage loan debt by: (1) making a payoff request to Option One, her prior mortgage loan servicer, on September 19, 2005; (2) calling American Home Mortgage Servicing, Inc., her subsequent mortgage loan servicer, to ask about the status of the unpaid principal balance on the loan; and (3) admitting she tendered payments on the loan in her reconventional demand. Alternatively, Wells Fargo argues even if there was no acknowledgement of the debt, the trial court erred in finding that the entire mortgage debt should be canceled on prescription grounds, because only those mortgage loan installment payments that came due more than five years before the filing of this foreclosure suit could be prescribed.

         The policy basis for prescription is simple; parties who are actual or possible defendants should not have to worry about possible litigation for limitless periods of time after an event triggers the right to sue. The standard of review of a trial court's ruling on a peremptory exception of prescription turns on whether evidence is introduced. Wells Fargo Financial Louisiana, Inc. v. Galloway, 17-0413, p. 7 (La.App. 4 Cir. 11/15/17), 231 So.3d 793, 800. When no evidence is introduced, appellate courts review judgments sustaining an exception of prescription de novo, accepting the facts alleged in the petition as true. Id.; Lennie v. Exxon Mobil Corp., 17-0204, p. 3 (La.App. 5 Cir. 6/27/18), 251 So.3d 637, 642, writ denied, 18-1435 (La. 11/20/18), 256 So.3d 994. However, when evidence is introduced at a hearing on an exception of prescription, the trial court's findings of fact are reviewed under the manifest error standard. Id.; Tenorio v. Exxon Mobil Corp., 14-0814 (La.App. 5 Cir. 4/15/15), 170 So.3d 269, 273. When evidence is introduced but the case involves only the determination of a legal issue, not a dispute regarding material facts, an appellate court must review the issue de novo, giving no deference to the trial court's legal determination. Wells Fargo, 17-0413, p. 8, 231 So.3d at 800; Cawley v. National Fire & Marine Ins. Co., 10-2095, p. 3 (La.App. 1 Cir. 5/6/11), 65 So.3d 235, 237.

         Ordinarily, the party urging prescription bears the burden of proving that the cause of action has prescribed. Vicari v. Window World, Inc., 14-870 (La.App. 5 Cir. 5/28/15), 171 So.3d 425, 435. However, when prescription is evident on the face of the pleadings, the burden shifts to the plaintiff to show the action has not prescribed. Id.

         "Actions on instruments, whether negotiable or not, and on promissory notes, whether negotiable or not, are subject to a liberative prescription of five years. This prescription commences to run from the day payment is exigible." La. C.C. art. 3498. An installment note normally has a separate five-year prescriptive period for each scheduled payment. When the note has been accelerated, however, the five-year prescription for the entire note begins to run on the date of acceleration. JP Morgan Chase Bank, N.A. v. Boohaker, 14-0549, pp. 10-11 (La.App. 1 Cir. 11/20/14), 168 So.3d 421, 428. When there has been more than one lawsuit over a note, and the note is accelerated in the first suit, and a later suit is not filed until more than five years after the acceleration in the first suit, then the claim asserted in the later suit has prescribed. See Occidental Props., Ltd. v. Zufle, 14-0494, p. 10 (La.App. 5 Cir. 11/25/14), 165 So.3d 124, 130.

         In this matter, Wells Fargo sued in 2002 and dismissed the matter without prejudice after some sort of settlement. In 2003, Wells Fargo sued again, although its efforts to use executory process for a quick seizure were unsuccessful, Wells Fargo decided to dismiss without prejudice. On March 4, 2010, Wells Fargo filed the present action as an ordinary proceeding. The present litigation was initiated more than seven years after the note at issue was accelerated. Because of the acceleration, the note at issue appears prescribed on its face. On February 11, 2002, Wells Fargo filed a petition for executory process, which accelerated and/or recognized a prior acceleration of the June 26, 2000 note. This case was dismissed. On December 16, 2003, Wells Fargo filed its second petition for executory process, including acceleration of the note. This case was also dismissed. However, at the time of acceleration the entire debt/note became due. Accordingly, based on the five-year prescriptive period of La. C.C. art. 3498, the debt at issue in the instant case prescribed on either February 11, 2007 or at the latest on December 16, 2008.

         Wells Fargo urges that Ms. Washington tacitly acknowledged the obligation by making two alleged phone calls, one on September 19, 2005, to a loan servicer to obtain a payoff amount, and the other on July 1, 2009, to a loan servicer to learn the unpaid balance. These are the only communications which Wells Fargo identified in response to written discovery as occurring between Ms. Washington and Wells ...


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