Affirmed and Memorandum Opinion filed January 14, 2020.




                                     In The

                    Fourteenth Court of Appeals

                             NO. 14-18-00332-CV

           U.S. ROF III LEGAL TITLE TRUST 2015-I, Appellant
                                       V.
                         MORLOCK, L.L.C., Appellee

                   On Appeal from the 281st District Court
                           Harris County, Texas
                     Trial Court Cause No. 2016-14187

                         MEMORANDUM OPINION


      Appellant, U.S. ROF III Legal Title Trust 2015-I (“ROF”), appeals the grant
of summary judgment in favor of appellee, Morlock, L.L.C. (“Morlock”). ROF
contends the trial court (1) erroneously granted summary judgment because it
“fail[ed] to properly apply concepts of equity and fairness to toll limitations or
otherwise estop Morlock from asserting that ROF III’s lien was void based on
passage of time”; and (2) abused its discretion when it denied ROF’s motion for
new trial because “evidence discovered after summary judgment would have
produced a different result as a matter of law.” We affirm.

                                   BACKGROUND

      In 2008, Thearith Soeung and Maly May (“Borrowers”) purchased property
located at 14907 East Lime Blossom Court in Cypress, Texas (the “Property”).
Borrowers executed a promissory note payable to lender, Destino Mortgage, Inc.
The note was secured by a deed of trust under which Mortgage Electronic
Registration Systems, Inc. was named a beneficiary and acted “as a nominee for
Lender and Lender’s successors and assigns.”      Mortgage Electronic Registration
Systems, Inc. assigned its interest in the deed of trust to Metlife Home Loans,
L.L.C. (“Metlife”).

      The Property had a prior recorded homeowners’ association lien for
assessments created through a declaration of covenants. When the Borrowers
failed to pay assessments, the homeowners’ association foreclosed on the Property.
Morlock then purchased the Property “subject to any superior liens and
encumbrances against the property” at a foreclosure sale in September 2011.

      On December 12, 2011, Metlife sent the Borrowers a Notice of Prior
Acceleration, in which it stated that (1) “despite the sending of written notice of
default and notice of intent to accelerate the maturity of the Loan, the default was
not timely cured”; (2) Metlife “accelerated the maturity of the Loan, and declared
the entire balance of the Loan due and payable in full”; and (3) Metlife enclosed “a
copy of the Notice of the Substitute Trustee’s Sale that advises the foreclosure sale
of the Property authorized by the Deed of Trust will take place on January 03,
2012, at the place designated by the Harris County Commissioners Court pursuant
to Section 51.002, and the Property will be sold to the highest bidder for cash.”


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        Pursuant to the deed of trust, Metlife posted the Property for a substitute
trustee’s sale scheduled for January 3, 2012.         On the day of the scheduled
foreclosure sale, Morlock filed a petition and application for temporary restraining
order in Texas state court seeking to enjoin the foreclosure sale and quiet title to
the Property.     Metlife removed the case to federal court based on diversity
jurisdiction and moved to dismiss for failure to state a claim. On January 9, 2013,
the magistrate judge signed a memorandum (1) rejecting Morlock’s argument that
“its lien, obtained pursuant to the Declaration of Covenants, is superior to”
Metlife’s lien because “under Texas law, a homeowners[’] association’s lien for
assessments, such as that set forth in the Declaration of Covenants, is subordinate
to first priority mortgage liens”; (2) finding Morlock “failed to establish the
superiority of its title to the Property relative to” Metlife and thus Morlock could
not establish a cause of action to quiet title; and (3) recommending that summary
judgment be granted in favor of Metlife and that Metlife’s motion to dismiss be
granted. The Fifth Circuit affirmed in a per curiam opinion on September 12,
2013.

        Metlife did not post the Property for a foreclosure sale after the federal court
opinions issued and the deed of trust was assigned to several different entities over
time. ROF acquired the deed of trust by assignment in July 2015. On January 11,
2016, ROF posted a notice of foreclosure sale for February 2, 2016, pursuant to the
deed of trust, then ROF purchased the Property at that sale. When ROF demanded
possession of the Property, Morlock filed suit in March 2016 seeking a declaratory
judgment that (1) enforcement of the deed of trust was barred by the statute of
limitations and ROF could not conduct a foreclosure sale of the Property, (2) the
deed of trust is unenforceable and the trustee’s foreclosure sale and the foreclosure
sale deed are void, and (3) “strikes the Trustees Deed and Deed of Trust as clouds


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on Plaintiff’s title to the Property.” Morlock also sought a temporary restraining
order and temporary injunction.

      In March 2017, Morlock moved for summary judgment arguing that the
trustee’s sale and trustee’s sale deed “were conducted under a deed of trust which
was void . . . because enforcement of the deed of trust was barred by the statute of
limitations.” ROF filed a response to Morlock’s motion, arguing the statute of
limitations was tolled because it was prevented from conducting a foreclosure sale
during the pendency and resolution of Morlock’s first suit. In April 2017, the trial
court denied Morlock’s motion for summary judgment.

      In May 2017, ROF filed a summary judgment motion asserting that (1)
foreclosure of the Property was not barred by the statute of limitations but
limitations was equitably tolled until Morlock’s first suit was resolved in the courts
because “the viability of [ROF]’s foreclosure action was dependent upon the
outcome of the original quiet title suit against [ROF]’s predecessor in interest,
Metlife”; and (2) Morlock’s statute of limitations defense to foreclosure is barred
by quasi estoppel. Morlock responded to ROF’s motion making substantially
similar arguments it had proffered in its summary judgment motion.

      The trial court signed an order denying ROF’s summary judgment motion on
October 31, 2017. On the same day, the trial court signed an order (1) setting aside
its April 18, 2017 order denying Morlock’s summary judgment motion, and (2)
granting Morlock’s summary judgment motion.

      In November 2017, ROF filed a “Motion for Reconsideration, Motion for
New Trial, and Motion for Leave to Include Summary Judgment Evidence” based
on newly discovered evidence. In response, Morlock argued that ROF failed to
establish it was entitled to a new trial based on newly discovered evidence.


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      The trial court signed an amended final summary judgment on January 25,
2018, ordering (among other things) that (1) Morlock’s summary judgment is
granted; (2) the February 2, 2016 foreclosure sale of the Property is void; (3) the
substitute trustee’s deed dated February 8, 2016 is declared void; (4) all liens of
ROF are declared void; and (5) Morlock is the “owner of the Property, free and
clear of any liens held by” ROF.

      The trial court signed an order denying ROF’s motion for new trial on
February 26, 2018. The court concluded ROF failed to demonstrate the allegedly
newly discovered evidence “came to [ROF]’s knowledge since the trial,” and “the
failure to discover the evidence sooner was not due to a lack of diligence.”

      ROF filed a timely notice of appeal.

                                     ANALYSIS

I.    Summary Judgment based on Statute of Limitations

      In its first issue, ROF contends the trial court erroneously granted summary
judgment in favor of Morlock on the statute of limitations defense because
“limitations was tolled while [Morlock’s] first suit was pending.”

      A.     Standard of Review and Applicable Law

      This case arrives on appeal by way of cross-motions for traditional summary
judgment. We review summary judgments de novo. Lujan v. Navistar, Inc., 555
S.W.3d 79, 84 (Tex. 2018). In a traditional motion for summary judgment, the
movant must show there is no genuine issue of material fact and the movant is
entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Lujan, 555
S.W.3d at 84. A party moving for summary judgment must conclusively prove all
elements of its cause of action or defense as a matter of law. Holy Cross Church of
God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001); Godoy v. Wells Fargo

                                          5
Bank, N.A., 542 S.W.3d 50, 51 (Tex. App.—Houston [14th Dist.] 2017), aff’d, 575
S.W.3d 531 (Tex. 2019). When both sides move for summary judgment and the
trial court grants one motion but denies the other, the reviewing court should
review both sides’ summary judgment evidence, determine all questions presented,
and render the judgment that the trial court should have rendered. Wolf, 44 S.W.3d
at 566; see also S. Crushed Concrete, LLC v. City of Houston, 398 S.W.3d 676,
678 (Tex. 2013).

      A statute of limitations does not give any right of action; rather, it restricts
the period within which a party can assert a right. Landers v. Nationstar Mortg.,
LLC, 461 S.W.3d 923, 925 (Tex. App.—Tyler 2015, pet. denied); Hunt Steed v.
Steed, 908 S.W.2d 581, 583 (Tex. App.—Fort Worth 1995, writ denied). The
primary purpose of a statute of limitations is to compel the exercise of a right
within a reasonable time so that the opposite party has a fair opportunity to defend.
Cont’l S. Lines, Inc. v. Hilland, 528 S.W.2d 828, 831 (Tex. 1975); Landers, 461
S.W.3d at 925.

      Section 16.035(a) provides that 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 cause of action accrues.” Tex. Civ. Prac. &
Rem. Code Ann. § 16.035(a). A “real property lien” includes a deed of trust. See
id. § 16.035(g)(2). Section 16.035(b) provides that 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 cause of action accrues.” Id. §
16.035(b).

      “If a series of notes or obligations or a note or obligation payable in
installments is secured by a real property lien, the four-year limitations period does
not begin to run until the maturity date of the last note, obligation, or installment.”

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Id. § 16.035(e). When, as here, the note or deed of trust contains an optional
acceleration clause, the cause of action accrues, and the limitations period begins
to run, when the “holder actually exercises its option to accelerate.” Wolf, 44
S.W.3d at 566.

       Therefore, a sale of property pursuant to a power of sale in a mortgage or
deed of trust must take place within four years of the exercise of the option to
accelerate. See Tex. Civ. Prac. & Rem. Code Ann. § 16.035(b); Wolf, 44 S.W.3d
at 567. Once the four-year limitations period has expired, both the real property
lien and the power of sale to enforce the real property lien become void. See Tex.
Civ. Prac. & Rem. Code Ann. § 16.035(d); Wolf, 44 S.W.3d at 567. The running
of limitations is tolled by statute in the event of the obligor’s death or a written,
recorded agreement extending the maturity date of the debt or obligation. See Tex.
Civ. Prac. & Rem. Code Ann. §§ 16.035(c), 16.036, 16.062; Wolf, 44 S.W.3d at
567.

       B.    Tolling of Statute of Limitations

       ROF argues summary judgment should be reversed and rendered in its favor
because the February 2, 2016 foreclosure sale was not barred by the applicable
four-year statute of limitations, and thus neither the foreclosure sale nor the
foreclosure sale deed were void. ROF acknowledges that the limitations period to
enforce the deed of trust through non-judicial foreclosure began to run in
December 2011 (when its predecessor Metlife exercised the option to accelerate)
and limitations would have expired in December 2015. However, ROF contends
the statute of limitations was equitably tolled from January 2012 (when Morlock
filed its first suit to quiet title) until September 2013 because “Metlife was
effectively prevented from selling the property at a non-judicial sale during the 618
day ‘pendency of legal proceedings’ the sole purpose of which was to determine

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whether Metlife’s legal remedy was or was not available.” According to ROF,
“[u]ntil the Fifth Circuit affirmed judgment in its favor, Metlife was prevented
from exercising the legal remedy of a superior lien holder by the pendency of
Morlock’s suit challenging that status.”

      To support its argument, ROF heavily relies on Hughes v. Mahaney &
Higgins, 821 S.W.2d 154 (Tex. 1991) and Pioneer Bldg. & Loan Ass’n v.
Johnston, 117 S.W.2d 556 (Tex. App.—Waco 1938, writ dism’d).                    ROF
particularly points to the following language in Hughes and Pioneer: “‘a person is
prevented from exercising his legal remedy by the pendency of legal proceedings,
the time during which he is thus prevented should not be counted against him in
determining whether limitations have barred his right.’” Hughes, 821 S.W.2d at
157 (quoting Walker v. Hanes, 570 S.W.2d 534, 540 (Tex. Civ. App.—Corpus
Christi 1978, writ ref’d n.r.e.)); Pioneer, 117 S.W.2d at 559. However, we find
both cases inapplicable.

      Hughes was a malpractice case. In Hughes, plaintiffs claimed their attorney
erred in failing to name them temporary managing conservators of the child they
planned to adopt. 821 S.W.2d at 155-56. When the biological mother had a
change of heart, she sued for custody of the child, and plaintiffs counterclaimed for
termination of her rights. Id. The court of appeals reversed a judgment for
plaintiffs, holding they lacked standing to assert their claim. Id. at 156. Plaintiffs
then sued their attorney for malpractice, contending that they would have prevailed
in the parental rights termination suit if they had been named temporary managing
conservators originally. Id. The supreme court held that limitations was tolled on
the malpractice claim during the pendency of the termination litigation. Id. at 157.

      The court explained that if limitations were not tolled, plaintiffs would have
been required to file the malpractice suit while the termination suit was still

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pending, and to assert in one suit that their attorney’s actions were proper and in
the other suit that his actions were improper. Id. at 156-57. The supreme court
stated that, when “‘a person is prevented from exercising his legal remedy by the
pendency of legal proceedings, the time during which he is thus prevented should
not be counted against him in determining whether limitations have barred his
right.’” Id. at 157 (quoting Walker, 570 S.W.2d at 540). The court concluded this
rationale applied to the plaintiffs’ malpractice suit and “limitations are tolled
because the viability of the second cause of action depend[ed] on the outcome of
the first.” Id. It held that when an attorney commits malpractice in the prosecution
or defense of a claim that results in litigation, the statute of limitations on the
malpractice claim against the attorney is tolled until all appeals on the underlying
claim are exhausted. Id.

      However, the supreme court made clear that Hughes was a very limited
holding, stating as follows:

      Hughes does not hold that limitations is tolled whenever a litigant
      might be forced to take inconsistent positions. Such an exception to
      limitations would be far too broad. We expressly limited the rule in
      Hughes to attorney malpractice in the prosecution or defense of a
      claim that results in litigation. In such circumstances, to require the
      client to file a malpractice claim against the lawyer representing him
      in another case would necessarily make it virtually impossible for the
      lawyer to continue his representation. The client's only alternative
      would be to obtain other counsel. That consideration, coupled with the
      necessity of taking inconsistent positions, persuaded us to adopt a
      tolling rule in Hughes. We restricted it to the circumstances presented.
Murphy v. Campbell, 964 S.W.2d 265, 272 (Tex. 1997).

      Pioneer is also distinguishable from the case before us in a material way. In
Pioneer, borrowers filed suit against Pioneer Building & Loan Association to
cancel notes and deeds of trust “evidencing two separate loans and to restrain a


                                         9
sale of the mortgaged property under the powers given in the deeds of trust.”
Pioneer, 117 S.W.2d at 557. The trial court granted a temporary and permanent
injunction restraining the lender from selling the mortgaged property under the
powers given in the deeds of trust. Id. at 557-59. The lender was thus prevented
from exercising its legal right to sell the property at a non-judicial foreclosure sale.
Id.   The court of appeals held that the statute of limitations for non-judicial
foreclosure was tolled during the time the lender was restrained by the trial court’s
injunction from exercising the power of sale in the deeds of trust. Id. at 559.

       Here, the record contains no evidence of a comparable impediment that
prevented ROF from asserting or preserving its non-judicial foreclosure remedy.
Contrary to ROF’s contention that the trial court should have concluded (based on
Hughes and Pioneer) that ROF’s right to sell the property under the deed of trust
was not barred by limitations, neither case presents a basis for tolling limitations.
This case is not a malpractice case, nor does ROF contend it was forced to take
inconsistent positions in litigation as the parties in Hughes. The record also does
not contain any evidence that ROF was restrained or enjoined from exercising the
power of sale in the deed of trust as in Pioneer. ROF asserts in its brief that
Morlock “aborted,” “interrupted,” and “arrested Metlife’s timely enforcement of its
non-judicial foreclosure right,” and that Morlock was ‘“directly responsible’ for
issuance of a restraining order against Metlife that stopped a timely scheduled
foreclosure sale.”    ROF cites to no evidence in the record to support these
statements, and our review of the record has not revealed an injunction or
restraining order.

       We also are not persuaded by ROF’s assertion that “[t]here was no
counterclaim or alternative remedy available to Metlife.” Nothing prevented ROF
from filing a counterclaim and preserving its legal remedy and right to non-

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judicially foreclose under the deed of trust after Morlock filed its first suit to quiet
title in January 2012. We see no reason why ROF could not have asserted a
counterclaim seeking an order permitting foreclosure on the Property under the
deed of trust.

      We conclude the record contains no evidence of a legal impediment that
prevented ROF from asserting and preserving its non-judicial foreclosure remedy
within the four-year statute of limitations so as to warrant a tolling of limitations
during the pendency of Morlock’s first suit. Therefore, we conclude the trial court
did not err in (1) finding that the statute of limitations was not equitably tolled, and
(2) granting summary judgment in favor of Morlock and against ROF.
Accordingly, we overrule ROF’s first issue.

II.   Motion for New Trial based on Newly Discovered Evidence

      In its second issue, ROF contends the trial court erred by denying its motion
for new trial when “evidence discovered after summary judgment would have
produced a different result as a matter of law.”

      A party seeking a new trial on grounds of newly discovered evidence must
demonstrate to the trial court that (1) the evidence has come to its knowledge since
the trial, (2) its failure to discover the evidence sooner was not due to lack of
diligence, (3) the evidence is not cumulative, and (4) the evidence is so material it
would probably produce a different result if a new trial were granted. Waffle
House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex. 2010). We review the denial
of a motion for new trial for abuse of discretion. Id.

      ROF filed a motion for new trial asserting (1) it hired a firm to audit its files
after summary judgment, (2) the firm found a notice of default dated May 13,
2014, (3) the notice sent by ROF’s predecessor to the Borrowers indicated the


                                          11
earlier acceleration was abandoned (thus showing that ROF’s foreclosure sale was
within the four-year statute of limitations), (4) despite ROF’s diligent search of its
records prior to filing its summary judgment motion, it was unable to locate the
notice, and (5) this newly discovered evidence “would almost certainly have
resulted in summary judgment being granted for [ROF], rather than [Morlock].”
ROF only attached a business records affidavit and the notice of default to its
motion for new trial.

      In response, Morlock asserted that ROF failed to establish the four elements
necessary to obtain a new trial based on newly discovered evidence. Morlock also
pointed out that ROF’s “statements [in the motion for new trial] are not verified
and do not constitute any sworn evidence.” ROF filed a reply but did not address
Morlock’s complaints regarding the lack of evidence.         The trial court denied
ROF’s motion because ROF failed to demonstrate the first two required elements.

      On appeal, ROF complains “the trial court mechanically applied the ‘four
factor test’ generally relied on” when it “determined ROF III presented ‘no
evidence’ that the May, 2014 notice of default came to ROF III’s knowledge since
the trial and no evidence that the failure to discover the record sooner ‘was not due
to a lack of diligence.’” ROF states it presented “a business records affidavit
‘proving up’ the May 13, 2014 notice of default.” It also states that, “[r]ather than
offering affidavit testimony of elements one and two—that the notice of default
was discovered after judgment and an explication on the diligence used to discover
evidence before judgment—ROF III’s counsel set forth such matters in the body of
the motion and reply in support of the motion for new trial.” According to ROF,
“the historic cases from which the four part test derives do not appear to expressly
require admissible evidence.” Therefore, ROF contends, “the explanations offered
in the motion and the reply in support should have sufficed to establish when the

                                         12
May 13, 2014 notice of default was found and why it was not found sooner.”

      We reject ROF’s argument.          To obtain a new trial based on newly
discovered evidence, each of the four elements must be established by an affidavit
or other admissible, competent evidence.           See Wagley v. Neighborhood Ins.
Specialists, No. 14-16-00859-CV, 2018 WL 2139196, at *8 (Tex. App.—Houston
[14th Dist.] May 10, 2018, no pet.) (mem. op.) (“Wagley did not attach to her
motion for new trial an affidavit or any other evidence showing that the ‘newly
discovered’ evidence came to her attention after the trial court granted summary
judgment or that she used due diligence yet still was unable to obtain the evidence
at the time she responded to the motion for summary judgment.”); Nixon v. GMAC
Mortg. Corp., No. 05-08-00256-CV, 2009 WL 2973660, at *4 (Tex. App.—Dallas
Sept. 18, 2009, no pet.) (mem. op.) (To obtain a new trial based on newly
discovered evidence, “[e]ach of the [four] elements must be established by an
affidavit of the party.”); Nguyen v. Minh Food Co., 744 S.W.2d 620, 621 (Tex.
App.—Dallas 1987, writ denied) (“It is well settled that in order to require the
granting of a new trial on grounds of newly discovered evidence, it is essential that
the moving party introduce admissible, competent evidence at the hearing on the
motion for new trial showing [the four elements].”) (emphasis in original); see also
Poe v. Nessa’s Mexican Rest. Inc., No. 14-00-01336-CV, 2002 WL 192366, at *2
(Tex. App.—Houston [14th Dist.] Feb. 7, 2002, no pet.) (mem. op., not designated
for publication) (“Poe’s motion did not include any affidavit establishing due
diligence.”); Miller v. Miller, No. 14-96-00326-CV, 1996 WL 727352, at *3 (Tex.
App.—Houston [14th Dist.] Dec. 19, 1996, no writ) (mem. op., not designated for
publication) (“Stephanie did not offer any competent proof to support her assertion
of newly discovered evidence. Her motion for new trial is not only unverified, but
is unsupported by any affidavits or exhibits.”).


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      We conclude the trial court correctly determined ROF failed to present any
evidence that (1) the newly discovered evidence has come to its knowledge since
the trial and (2) its failure to discover the evidence sooner was not due to a lack of
diligence. The trial court therefore acted within its discretion in denying ROF’s
motion for new trial. Accordingly, we overrule ROF’s second issue.

                                   CONCLUSION

      We affirm the trial court’s judgment.




                                       /s/    Meagan Hassan
                                              Justice


Panel consists of Justices Christopher, Hassan, and Poissant.




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