     Case: 15-51116      Document: 00513505404         Page: 1    Date Filed: 05/13/2016




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT


                                    No. 15-51116                         United States Court of Appeals
                                  Summary Calendar                                Fifth Circuit

                                                                                FILED
                                                                            May 13, 2016
BITTERROOT HOLDINGS, L.L.C.,                                               Lyle W. Cayce
                                                                                Clerk
              Plaintiff - Appellant

v.

MTGLQ INVESTORS, L.P.,

              Defendant - Appellee




                   Appeal from the United States District Court
                        for the Western District of Texas
                             USDC No. 5:14-CV-862


Before KING, CLEMENT, and OWEN, Circuit Judges.
PER CURIAM:*
       Plaintiff–Appellant Bitterroot Holdings, L.L.C., filed suit in state court
against Defendant–Appellee MTGLQ Investors, L.P., seeking declaratory and
injunctive relief to prevent MTGLQ from foreclosing upon a property in San
Antonio, Texas. Following removal to federal court, both parties filed motions
for summary judgment, with Bitterroot arguing that any foreclosure action 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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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MTGLQ was time barred under Texas law and MTGLQ arguing that its
foreclosure action was timely and that it held title to the property in question.
The district court denied Bitterroot’s motion for summary judgment but
granted MTGLQ’s motion. Bitterroot now appeals. For the following reasons,
we AFFIRM the judgment of the district court.
           I. FACTUAL AND PROCEDURAL BACKGROUND
      The instant appeal arises from a dispute over the parties’ right to title
and their security interests in a property in San Antonio, Texas. On November
12, 2005, John Harvey executed a Texas Home Equity Note (Note) in the
amount of $94,320.00 payable to American Equity Mortgage, Inc., (AME) and
executed a Texas Home Equity Security Instrument (Deed of Trust) granting
AME a security interest in a property located in San Antonio as part of the
loan made to Harvey. The Note included an acceleration clause whereby the
holder of the Note could require immediate payment of the principal of the
Note and all interest on the Note in the event that Harvey defaulted on
payments required by the Note and Deed of Trust. Under the Deed of Trust,
the noteholder could foreclose on the property in the event of default by Harvey
pursuant to the holder’s security interest in the property.       Thereafter, a
nominee for AME assigned the Note and the Deed of Trust to Citimortgage,
Inc. (Citimortgage).
      On October 26, 2007, Citimortgage informed Harvey that he was in
default on his loan and needed to pay $1,976.38 in order to cure the default.
Citimortgage then sent another Notice of Default on November 3, 2008,
informing Harvey that failure to cure the default would result in acceleration
of the loan. Finally, on February 20, 2009, Citimortgage sent Harvey a Notice
of Acceleration informing him that Citimortgage had elected to accelerate the
maturity of the debt.    Citimortgage subsequently filed an application for
foreclosure of the property guaranteed as a security interest under the Deed of
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Trust but later successfully moved to have this application dismissed in late
2009. Another application for foreclosure of the property was filed in August
2010, but the application was similarly dismissed in 2011. On November 4,
2010, Citimortgage assigned the Note and Deed of Trust to Defendant–
Appellee MTGLQ Investors, L.P. (MTGLQ).
      In a matter unrelated to MTGLQ’s security interest, the property was
sold in 2011 to DTND Sierra Investments, LLC (DTND), at a homeowner’s
association foreclosure sale resulting from Harvey’s failure to pay the
homeowner’s association assessments and dues.         DTND later assigned its
interest in the property to Plaintiff–Appellant Bitterroot Holdings, LLC
(Bitterroot). Following the sale, MTGLQ’s counsel sent another Notice of
Default and Notice of Acceleration to Harvey stating that MTGLQ had decided
to accelerate the maturity of Harvey’s debt.       MTGLQ then filed its own
application for foreclosure of the property in the 166th Judicial District Court
of Bexar County, Texas, on June 24, 2013. And on November 8, 2013, that
court ruled that MTGLQ could proceed with a foreclosure sale of the property
based on its rights under the Note and the Deed of Trust.
      Seeking to enjoin the foreclosure sale, Bitterroot filed the instant action
in the 73rd Judicial District Court of Bexar County on August 1, 2014. MTGLQ
then removed the action to the United States District Court for the Western
District of Texas on October 2, 2014, asserting diversity jurisdiction under 28
U.S.C. § 1332(a).    Bitterroot subsequently filed an amended complaint in
federal court against MTGLQ, seeking to have the court enjoin MTGLQ’s
foreclosure sale. In particular, Bitterroot brought a trespass to try title action
against MTGLQ, asserting that it had title to the property. Bitterroot also
asserted that MTGLQ violated the Texas Deceptive Trade Practices Act
(DTPA), alleging that MTGLQ had misrepresented facts in its state foreclosure
action.
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      Both parties moved for summary judgment on July 6, 2015. In its motion
for summary judgment against Bitterroot, MTGLQ asserted its right to
foreclose and that it had superior title to Bitterroot. MTGLQ also argued that
its foreclosure action was timely filed within the relevant limitations period
because it brought the action within four years of accelerating the loan in 2012
and that any previous acceleration attempts were immaterial to the limitations
period because they were abandoned. MTGLQ attached a number of exhibits
to its motion, including the affidavit of a senior loan analyst, Howard R.
Handville, who recounted the history of the Note and the Deed of Trust leading
up to Bitterroot’s suit. Bitterroot, for its part, moved for partial summary
judgment against MTGLQ. In its motion, Bitterroot argued that MTGLQ was
barred from bringing the foreclosure action. Bitterroot claimed that the four-
year limitation period to bring a foreclosure action had run because there had
been an acceleration of the Note in 2008, and Citimortgage and MTGLQ had
failed to abandon the acceleration. In the alternative, Bitterroot argued that
Harvey had relied upon the 2008 acceleration notice and that his reliance
precluded Citimortgage or MTGLQ from abandoning the acceleration.
Bitterroot later filed its opposition to MTGLQ’s motion for summary judgment,
contending that the Handville affidavit could not be considered by the court
because Handville had not been identified as a witness in MTGLQ’s Rule 26
disclosures.
      On October 23, 2015, the district court entered final judgment denying
Bitterroot’s motion for partial summary judgment and granting MTGLQ’s
motion for summary judgment. With respect to the Handville affidavit, the
district court concluded that the failure to disclose Handville as a witness was
harmless, as Bitterroot had previously been aware of the Handville affidavit
and the failure to disclose had been inadvertent. As to the merits, the district
court held that Bitterroot failed to establish a genuine dispute of fact that its
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title to the property was superior to that of MTGLQ on its trespass to try title
claim. Moreover, the court held that the right to foreclose was not barred by
the applicable statute of limitations.        Responding to Bitterroot’s reliance
argument, the district court held that it was less than clear that the Supreme
Court of Texas would recognize a detrimental reliance exception to
abandonment of acceleration of a loan.        But the court also held—assuming
that there was a detrimental reliance exception—that Bitterroot failed to show
that Harvey detrimentally relied on the previous accelerations. In particular,
the court noted that Harvey remained in debt both before and after the notices
of acceleration and that Bitterroot failed to show other evidence of detrimental
reliance. 1   Bitterroot timely appealed the district court’s judgment on
November 23, 2015, contending that the district court erred in granting
summary judgment and by not excluding the Handville affidavit.
                         II. STANDARD OF REVIEW
      We review a grant of summary judgment de novo, applying the same
standard as the district court. Rogers v. Bromac Title Servs., L.L.C., 755 F.3d
347, 350 (5th Cir. 2014). Summary judgment is proper “if the movant shows
that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine
dispute of material fact exists “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). However, “[a] mere scintilla of evidence will not
preclude granting of a motion for summary judgment.” Schaefer v. Gulf Coast
Reg’l Blood Ctr., 10 F.3d 327, 330 (5th Cir. 1994) (per curiam). “We construe
all facts and inferences in the light most favorable to the nonmoving party



      1 The district court also granted summary judgment to MTGLQ on Bitterroot’s DTPA
claims. These claims are not before us on appeal.
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when reviewing grants of motions for summary judgment.” Dillon v. Rogers,
596 F.3d 260, 266 (5th Cir. 2010) (quoting Murray v. Earle, 405 F.3d 278, 284
(5th Cir. 2005)).       With respect to Bitterroot’s objection to the Handville
affidavit, “[w]e review for abuse of discretion a decision not to exclude
documents under [Federal Rule of Civil Procedure] 37.” Tex. A&M Research
Found. v. Magna Transp., Inc., 338 F.3d 394, 402 (5th Cir. 2003).
                         III. STATUTE OF LIMITATIONS
       On appeal, Bitterroot primarily argues that the district court erred
because MTGLQ’s right to foreclose was barred by the statute of limitations. 2
Texas law provides that “[a] sale of a 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 cause of action accrues.” Tex. Civ. Prac.
& Rem. Code Ann. § 16.035(b). The relevant Texas statute then adds that “[o]n
the expiration of the four-year limitations period, the real property lien and a
power of sale to enforce the real property lien become void.” Tex. Civ. Prac. &
Rem. Code Ann. § 16.035(d). However, “[i]f a note or deed of trust secured by
real property contains an optional acceleration clause, default does not ipso
facto start limitations running on the note.” Holy Cross Church of God in
Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001). “Rather, the action accrues only
when the holder actually exercises its option to accelerate.” Id. And “[e]ven
when a noteholder has accelerated a note upon default, the holder can abandon
acceleration if the holder continues to accept payments without exacting any
remedies available to it upon declared maturity.” Id. at 566–67. Consequently,
when a noteholder abandons acceleration, the limitations period on foreclosure
actions generally restarts. Id.


       2 Bitterroot does not challenge the district court’s holding that Bitterroot failed to
establish a genuine dispute of material fact as to whether its title to the property was superior
to that of MTGLQ.
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        The district court found that, while Citimortgage had previously twice
accelerated the Note upon default in 2008 and 2010, both notices of
acceleration had been abandoned when Citimortgage dismissed its foreclosure
actions in state court.     As a result, the limitations period on MTGLQ’s
foreclosure action began when it accelerated the Note in 2012, and its action
was filed within the four-year limitations period. Bitterroot does not contest
the district court’s holding with respect to abandonment but argues instead
that abandonment could not have reset the limitations period because Harvey
had detrimentally relied on the initial acceleration by Citimortgage. According
to Bitterroot, the district court erred when it concluded that there was no
detrimental reliance exception to abandonment of acceleration under Texas
law.
        However, we need not determine whether or not the district court erred
in this respect because it correctly found that, assuming that there was a
detrimental reliance exception to abandonment, Harvey failed to show
detrimental reliance. See Bramblett v. Comm’r, 960 F.2d 526, 530 (5th Cir.
1992) (“This court can affirm a lower court’s decision if there are any grounds
in the record to support the judgment.”); cf. Boren v. U.S. Nat’l Bank Ass’n, 807
F.3d 99, 105 (5th Cir. 2015) (“As an initial matter, Texas' intermediate
appellate courts are in agreement that the holder of a note may unilaterally
abandon acceleration after its exercise, so long[] as the borrower neither objects
to abandonment nor has detrimentally relied on the acceleration.”). In order
to show detrimental reliance under Texas law, a party “must show that he
materially changed his position in reliance” on another party’s promise or
representation. Sandel v. ATP Oil & Gas Corp., 243 S.W.3d 749, 753 (Tex.
App.—Houston [14th Dist.] 2007, no pet.).        In support of its detrimental
reliance argument, Bitterroot alleged—through Harvey’s own affidavit—that,
as a result of the original acceleration, Harvey decided not to pay off debt he
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owed to a homeowner’s association, decided not to get loan modification
assistance, and moved out of his home.
       As the district court correctly concluded, the evidence adduced by
Bitterroot was insufficient to show a dispute of material fact that Harvey relied
on the Citimortgage acceleration to his detriment. 3 Harvey’s decision not to
pay off a debt following the original acceleration was not a material change in
his position because he was in debt before and after the acceleration. Harvey’s
failure to obtain loan modification assistance similarly was not a material
change because Harvey admitted that he did not know about loan modification
programs prior to the acceleration. And while Harvey alleged that he moved
out of his house as a result of the acceleration, the district court correctly
recognized that Harvey’s affidavit failed to show any particular legal or
financial consequences incurred as a result of this decision. We therefore
conclude that the district court did not err when it held that there was no
evidence of detrimental reliance and that the statute of limitations did not
preclude MTGLQ’s foreclosure suit.
 IV. BITTERROOT’S OBJECTION TO THE HANDVILLE AFFIDAVIT
       Separately, Bitterroot argues that the district court should not have
allowed MTGLQ to introduce the Handville Affidavit as evidence because
MTGLQ failed to include Handville as a witness in its Rule 26 initial
disclosures. A party is generally “not allowed to use . . . information or [a]
witness to supply evidence on a motion, at a hearing, or at a trial” where that
party “fails to provide information or identify a witness [in its initial
disclosures] as required by Rule 26(a) or (e).” Fed. R. Civ. P. 37(c)(1). However,


       3 The district court also found that there was no evidence that Harvey had objected to
Citimortgage’s motions to dismiss its original foreclosure applications. See Manes v. Bletsch,
239 S.W. 307, 308 (Tex. Civ. App.—Austin 1922, no writ) (“[W]here the payer is not objecting
to the recall of such option, we can see no reason why the payee could not revoke the same as
well as not to have exercised it in the beginning.”).
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Rule 37 provides that this failure to disclose may be excused and evidence may
be introduced where the failure “was substantially justified or is harmless.”
Id. Accordingly, where a district court allows non-disclosed evidence to be
used, we look to four factors in determining whether the district court was
within its discretion in permitting the introduction of the evidence: “(1) the
importance of the evidence; (2) the prejudice to the opposing party of including
the evidence; (3) the possibility of curing such prejudice by granting a
continuance; and (4) the explanation for the party's failure to disclose.” Tex.
A&M Research Found., 338 F.3d at 402.
      The district court did not abuse its discretion in permitting the Handville
affidavit to be introduced. As the district court recognized, the affidavit was
important to the case, as it authenticated many of the claims at issue in the
case and traced the history of the Note and the Deed of Trust. There was also
no surprise in introducing the affidavit because, while the affidavit had not
been included in MTGLQ’s Rule 26 disclosures, the affidavit had previously
been used without objection by MTGLQ in a motion opposing remand.
Moreover, the district court recognized that the failure to disclose the affidavit
was not deliberate, but rather due to the fact that the court’s own scheduling
order did not make clear the deadline for the Rule 26 disclosures. We cannot
conclude based on these detailed findings that the district court abused its
discretion when it admitted the affidavit into evidence.
                              V. CONCLUSION
      For the foregoing reasons, we AFFIRM the district court’s judgment.




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