                                  COURT OF APPEALS
                               EIGHTH DISTRICT OF TEXAS
                                    EL PASO, TEXAS

                                               §
  PATRICK KING MULVEY, JR.,                                   No. 08-17-00186-CV
                                               §
                        Appellant,                                 Appeal from
                                               §
  v.                                                        County Court at Law No. 3
                                               §
  U.S. BANK NATIONAL                                         of El Paso County, Texas
  ASSOCIATION, AS TRUSTEE FOR                  §
  SASCO MORTGAGE LOAN TRUST                                   (TC # 2014DCV3597)
  2006-WF2,                                    §

                        Appellee.              §

                                        OPINION

       In this appeal, we review a summary judgment in favor of a lender that foreclosed on

property securing a home equity loan. The question before us is whether the homeowner presented

some evidence supporting one or more of his asserted affirmative defenses. We conclude that he

did not, and we affirm the judgment below.

                                      BACKGROUND

       The relevant facts, all derived from the summary judgment record, are easily stated. On

April 6, 2006, Patrick King Mulvey, Jr. (Mulvey) borrowed $126,400.00 from Wells Fargo Bank,

N.A (Wells Fargo) through a Texas home equity loan. Mulvey promised to repay the note in

monthly installments. In conjunction with the note, Mulvey executed a Texas Home Equity
Security Instrument (“deed of trust”) that granted a security interest in the real property located at

11260 Signal Ridge Drive in El Paso, Texas. The note and deed of trust were assigned to Appellee

U.S. Bank National Association, as Trustee for SASCO Mortgage Loan Trust 2006-WF2

(hereinafter “U.S. Bank”).

        At some point, Mulvey fell behind on payments, and on November 21, 2008, Wells Fargo

entered into a Loan Modification Agreement with Mulvey. That modification agreement adjusted

the monthly payments and set a new payment schedule. The modification agreement also

capitalized $9,983.47 of interest into the loan, making the new principal balance $132,413.36.

        In 2009, Mulvey again fell behind on his monthly payments. Wells Fargo, acting as the

mortgage servicer, hired a law firm to initiate foreclosure proceedings on behalf of U.S. Bank. In

a notice letter dated October 20, 2010, the law firm gave Mulvey written notice of a default and

intent to accelerate. On November 22, 2010, the law firm sent Mulvey a notice of acceleration.

Under the bank’s records, Mulvey did not make the July 1, 2009 payment, nor any payment

thereafter.

        U.S. Bank filed suit in November 2014 seeking title, possession, and foreclosure of the

property under the deed of trust. U.S. Bank claimed that right as the mortgagee, and holder of the

note and deed of trust on the property. It did not seek any amount due under the note. Mulvey

responded to the suit by filing a general denial.

        In June 2015, U.S. Bank filed a traditional motion for summary judgment. It attached the

note, the deed of trust, the 2011 notice of default/intent to accelerate and the notice of acceleration,

as well as various payment ledgers which purport to show the unpaid installments. The motion

was also supported by the affidavit of Rodney Young, Vice President for Loan Documentation at




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Well Fargo, who attested to the authenticity of the attached loan documents, notices, and records.

He also swore to default and the amount due.

        In response, Mulvey filed an “Amended Answer” to the summary judgment. Germane to

this appeal, it contains Mulvey’s affidavit which in relevant part claims:

        In April 2006 I obtained a home equity loan through Wells Fargo. In December
        2008 I entered into a modification agreement with Wells Fargo concerning my
        home equity loan. Wells Fargo advanced additional monies to me with the
        modification.
        I made several payments to Wells Fargo after the loan modification. I tried to make
        a payment at the Wells Fargo Bank around July or August, 2009 but they refused
        the payment stating, ‘I was in Active Foreclosure’ and that I had to contact the
        servicing department at Wells Fargo. When I did contact them I was informed that
        I no longer qualified for the mortgage and that was all I was told. Any delinquency
        on my part was due to Wells Fargo not accepting the payments and\or telling me
        what to do next except that I needed to complete additional paper work.
        After several years of trying to work with Wells Fargo, I was told they had me sign
        an Illegal Document with Illegal terms associated with that document in the State
        of Texas, at the time. This Illegal document is why I ‘did not qualify’ for the loan
        modification. On many occasions while talking with the various Wells Fargo’s
        personnel, they requested that I complete a form for another Loan Modification. I
        did not complete the forms knowing that they were Illegal.
        The trial court granted U.S. Bank’s motion for summary judgment. The court’s judgment

orders that Mulvey pay the entire sum owed under the note within thirty days, or failing that, the

property is to be sold and the proceeds, less the fee for conducting the sale, is to be applied to the

balance owed on the note. Mulvey was not responsible, however, for any deficiency following the

sale.

        Mulvey filed a motion for new trial that re-urged two of his affirmative defenses: (1) he

was not in default because Wells Fargo refused to accept his monthly payments; and (2) Wells

Fargo insisted on Mulvey entering into an illegal agreement. U.S. Bank filed a response to the

motion for new trial, that attached a new affidavit from Ashely Dellinger, Vice President of Loan

Documentation for Wells Fargo. She recounts all the same facts as Rodney Young’s earlier

                                                  3
affidavit. Her affidavit also adds, however, additional history of the loan, including that another

“Notice of Default and Intent to Accelerate” was sent around June 7, 2009, as well as a Notice of

Acceleration dated July 27, 2009. Her affidavit references some seventeen attachments, none of

which are included in the appellate record. The motion for new trial was overruled by operation

of law.

          This appeal follows. In a single issue, Mulvey contends that he raised some evidence in

support of several affirmative defenses to any default under the note, and U.S. Bank did not

conclusively disprove those defenses.

                                    STANDARD OF REVIEW

          We review a trial court’s decision to grant summary judgment de novo. Travelers Ins. Co.

v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010).

          U.S. Bank asserted a traditional summary judgment under TEX.R.CIV.P. 166a(c). Under a

traditional motion, the moving party carries the burden of showing that there is no genuine issue

of material fact and that it is entitled to judgment as a matter of law. Diversicare General Partner,

Inc. v. Rubio, 185 S.W.3d 842, 846 (Tex. 2005); Nixon v. Mr. Property Mgmt. Co., Inc., 690

S.W.2d 546, 548 (Tex. 1985). Evidence favorable to the non-movant is taken as true in deciding

whether there is a disputed issue of material fact. Fort Worth Osteopathic Hospital, Inc. v. Reese,

148 S.W.3d 94, 99 (Tex. 2004); Tranter v. Duemling, 129 S.W.3d 257, 260 (Tex.App.--El Paso

2004, no pet.). All reasonable inferences, including any doubts, must be resolved in favor of the

non-movant. Fort Worth Osteopathic Hospital, Inc., 148 S.W.3d at 99. Once the movant

establishes its right to summary judgment, the burden then shifts to the non-movant to present

evidence that raises a genuine issue of material fact, thereby precluding summary judgment. See

City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex. 1979).



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       In general, a moving plaintiff is not under any obligation to negate a defendant’s pleaded

affirmative defenses. Woodside v. Woodside, 154 S.W.3d 688, 691-92 (Tex.App.--El Paso 2004,

no pet.); Tesoro Petroleum Corp. v. Nabors Drilling USA, Inc., 106 S.W.3d 118, 124 (Tex.App.--

Houston [1st Dist.] 2002, pet. denied). Rather, an affirmative defense only prevents the granting

of summary judgment if each element of the affirmative defense is supported by summary

judgment evidence. Woodside, 154 S.W.3d at 691-92. At several junctures in the briefing, both

parties state that the non-movant carries the burden to conclusively prove an affirmative defense.

Here, that might be true if Mulvey had moved for summary judgment on his affirmative defenses.

See American Tobacco Co., Inc. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997)(defendant carried

burden of conclusively proving pre-emption defense in its summary judgment motion). But when

Mulvey only seeks to stave off U.S. Bank’s summary judgment based on an affirmative defense,

he needed to do no more than raise a fact issue as to each element of the defense. “Moore” Burger,

Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936-37 (Tex. 1972); Woodside, 154 S.W.3d at

691-92.

       Mulvey’s original answer asserted only a general denial. He appears to have combined

into a single pleading an “amended answer” and response to the motion for summary judgment, a

practice we neither condone nor encourage. But even assuming that Mulvey did not amend his

answer to assert affirmative defenses, U.S. Bank had two options: it could object that the

affirmative defenses had not been properly pled, or it could respond on the merits and try the issue

by consent. Via Net v. TIG Ins. Co., 211 S.W.3d 310, 313 (Tex. 2006); see also Roberts v. Wells

Fargo Bank, N.A., 406 S.W.3d 702, 707 (Tex.App.--El Paso 2013, no pet.)(noting the movant’s

same two choices); Nicholson v. Mem’l Hosp. Sys., 722 S.W.2d 746, 749 (Tex.App.--Houston

[14th Dist.] 1986, writ ref’d n.r.e.)(“If the affirmative defense is not specifically pled, but



                                                 5
competent summary judgment evidence establishes a genuine issue of material fact with regard to

that affirmative defense, summary judgment is improper.”). We find no indication that U.S. Bank

raised any pleading deficiency below. We therefore turn to the merits.

                                           DISCUSSION

                  Did U.S. Bank Prove its Entitlement to Summary Judgment

        U.S. Bank sought to judicially foreclose on property that secured a Texas home equity loan.

To sustain that claim, U.S. Bank needed to prove that it held a valid deed of trust on the real

property securing the note, and Mulvey was in default under terms of the note and security

agreement. See Kyle v. Countrywide Home Loans, Inc., 232 S.W.3d 355, 362 (Tex.App.--Dallas

2007, pet. denied)(stating that copy of security agreement and affidavit showing default were

sufficient to support summary judgment for judicial foreclosure); see also McKeehan v.

Wilmington Sav. Fund Soc’y, FSB, 554 S.W.3d 692 (Tex.App.--Houston [1st Dist.] 2018, no

pet. h.)(same); Salas v. LNV Corp., 409 S.W.3d 209, 220 (Tex.App.--Houston [14th Dist.] 2013,

no pet.)(same). Because U.S Bank sought to sell the property, it also needed to show that Mulvey

was properly served with a notice of default and acceleration. TEX.PROP.CODE ANN. § 51.002(d)

(“Notwithstanding any agreement to the contrary, the mortgage servicer of the debt shall serve a

debtor in default under a deed of trust or other contract lien on real property used as the debtor’s

residence with written notice by certified mail stating that the debtor is in default under the deed

of trust or other contract lien and giving the debtor at least 20 days to cure the default before notice

of sale can be given under Subsection (b).”).

        While Mulvey raised various challenges below to U.S. Bank’s status as the holder of the

note and deed of trust, none are urged on appeal, and we conclude that U.S. Bank met its initial

burden of showing that it was entitled to summary judgment on it judicial foreclosure claim.



                                                   6
Mulvey thus had the burden to come forward with some evidence to raise a genuine issue of

material fact challenging U.S. Bank’s right to obtain a judicial foreclosure.

                 Did Mulvey Raise a Fact Issue on His Affirmative Defenses?

       Mulvey’s single issue claims that the trial court erred in granting summary judgment

because he asserted affirmative defenses that were “not contested” by U.S. Bank. The substance

of his argument is that he asserted and presented some evidence of at least one affirmative defense

that raises a genuine issue of material fact precluding summary judgment. His affirmative defenses

alleged that: (1) U.S. Bank’s suit was barred by limitations; (2) Wells Fargo insisted on Mulvey

signing “illegal” paperwork, which appears to mean that Wells Fargo improperly advanced

additional money when it modified the loan; and (3) any default was based on Wells Fargo refusing

to accept tendered payments.

                                             Limitations

       The 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.

TEX.CIV.PRAC.&REM.CODE ANN. § 16.035(b); Holy Cross Church of God in Christ v. Wolf, 44

S.W.3d 562, 567 (Tex. 2001). Generally, when a note is payable in installments and is secured by

a real property lien, the four-year limitations period does not begin to run until the maturity date

of the note, or date of the last installment. TEX.CIV.PRAC.&REM.CODE ANN. § 16.035(c); EMC

Mortg. Corp. v. Window Box Ass’n, Inc., 264 S.W.3d 331, 335 (Tex.App.--Waco 2008, no pet.).

However, if that note allows for the acceleration of the payments upon default, the cause of action

accrues when the note holder actually accelerates the note. Wolf, 44 S.W.3d at 566; Boren v. U.S.

Nat. Bank Ass’n, 807 F.3d 99, 104 (5th Cir. 2015). Acceleration requires two distinct unequivocal

actions: (1) a notice of intent to accelerate, and (2) notice that the obligation has been accelerated.



                                                  7
Wolf, 44 S.W.3d at 566. Here, under the summary judgment record, the lender’s agent mailed a

notice of an intent to accelerate on October 26, 2010 and a notice of acceleration on November 22,

2010. The lawsuit was filed on November 12, 2014, which is within four years of the actual

acceleration of the debt. The trial court would have properly concluded that Mulvey did not raise

a material fact issue on a statute of limitations defense.

                                               Illegality

        Mulvey also claimed that someone told him that Wells Fargo had him sign an “Illegal

Document.” His affidavit fails to identify what document he refers to, nor does he explain what

makes it illegal. He further claims that he declined to pursue any kind of additional loan

modification because it would similarly require him to sign an “illegal” document.

        Courts will not enforce an illegal contract. Phillips v. Phillips, 820 S.W.2d 785, 789 (Tex.

1991). However, it is not for a lay witness to decide illegality, and we are not required to simply

accept the assertion of such in Mulvey’s affidavit. Cf. City of Keller v. Wilson, 168 S.W.3d 802,

812-13 (Tex. 2005)(“When expert testimony is required, lay evidence supporting liability is legally

insufficient. In such cases, a no-evidence review cannot disregard contrary evidence showing the

witness was unqualified to give an opinion.”). Without describing any specific document, or

failing to state the basis for the alleged illegality, his affidavit fails to raise any genuine issue of

material fact on an illegality defense.

        At most, by parsing his affidavit and written response together, we might surmise that

Mulvey was complaining that the loan modification agreement in November 2008 was an

extension of credit that violated section 50 of Article XVI of the Texas Constitution. Because this

was a home equity loan involving homestead property, the loan must have conformed to the

requirements for such loans as set out in the Texas Constitution. See Tex.Const. art. XVI, § 50.



                                                   8
Section 50(c) provides that no mortgage, trust deed, or other lien on the homestead shall ever be

valid unless it secures a debt “described by this section.” Tex.Const. art. XVI, § 50(c).

        The loan modification here actually increased the principle due under the note because it

capitalized $9,983.47 of interest into the loan, and thus raised the loan’s principal balance from

$126,400.00 to $132,413.36. Mulvey essentially claims that capitalizing past due interest into the

principal of the loan constitutes a new extension of credit, which would then require the loan

modification to meet the technical qualifications for home equity loans under section 50 of Article

XVI of the Texas Constitution. However, the Texas Supreme Court rejected a similar claim in

Sims v. Carrington Mortg. Services, L.L.C., 440 S.W.3d 10, 15 (Tex. 2014). There, the court held

that “as long as the original note is not satisfied and replaced, and there is no additional extension

of credit, as we define it, the restructuring is valid and need not meet the constitutional

requirements for a new loan.” Id. at 11-12. The court then further defined what was not an

additional extension of credit:

        [T]he restructuring of a home equity loan that, as in the context from which the
        question arises, involves capitalization of past-due amounts owed under the terms
        of the initial loan and a lowering of the interest rate and the amount of installment
        payments, but does not involve the satisfaction or replacement of the original note,
        an advancement of new funds, or an increase in the obligations created by the
        original note, is not a new extension of credit that must meet the requirements of
        Section 50.

Id. at 17.

        Here, the loan modification agreement specifically stated that the original note and

mortgage would “remain unchanged” and bound both parties except as specifically amended.

Mulvey’s response to the summary judgment complained only that the interest was capitalized into

the loan modification agreement. He asserts no other reason why the loan modification constitutes

an additional extension of credit. But the Sims court characterized recapitalization of interest as a



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“mechanism for deferring payment of obligations already owed in a way that allows the borrower

to retain his home.” Id. at 16. Based solely on the only argument that Mulvey raised, his summary

judgment proofs did not raise an illegality defense under the Texas Constitution.1

         Mulvey accordingly failed to raise a genuine issue of material fact on his illegality defense.

                                                Denial of Tender

         Finally, Mulvey’s response to the summary judgment alleged that he “was not past due on

his payments.” His response alleged that he attempted to “make payments to Wells Fargo for a

number of months in 2009” but Wells Fargo “refused the payments.” He also alleged that Wells

Fargo failed to notify him that payments were to be made to another entity and that the account

became delinquent because of Wells Fargo’s acts. His pleading then incorporates his affidavit, in

which he swears that “around July or August of 2009” Mulvey tried to make a payment at a Wells

Fargo Bank but it was refused. The stated basis for the refusal was that he was in active foreclosure

and no longer qualified for the mortgage.

         Mulvey’s brief refers to this a “confession and avoidance” defense. Confession and

avoidance is “a plea in which a defendant admits allegations but pleads additional facts that deprive

the admitted facts of an adverse legal effect.” Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143,

156 (Tex. 2015), quoting confession and avoidance, Black’s Law Dictionary 361 (10th ed. 2014).

What Mulvey really alleges is a breach of the agreement by U.S. Bank’s agent, Wells Fargo.

Assuming proper tender, Wells Fargo could not refuse payment, and then declare the note in

default. In several contexts, court have recognized wrongful refusal of a proper tender as a



1
  We do note that the monthly payment under the modification agreement differed from that in the original note
($1,176.32 verse $1,104.59). It was impossible to tell from Mulvey’s affidavit or his summary judgment proofs if the
increased monthly obligation was based only on the modification agreement or from some other reason. The original
note allowed that the monthly payment might fluctuate because the interest rate was adjustable. And in Sims, the court
noted that the required payment schedule under a home-equity loan “is not one that, when initially set, can never be
altered.” Id. at 16.

                                                         10
potential defensive issue. See Guaranty Bank v. Thompson, 632 S.W.2d 338, 340 (Tex. 1982),

citing predecessor version of TEX.BUS.&COM.CODE ANN. § 3.603 (agreeing that the wrongful

failure to accept tender might form a meritorious defense to the claimed default of installment note

contract); Universal Life & Acc. Ins. Co. v. Shaw, 163 S.W.2d 376, 379 (Tex. 1942)(stating similar

rule in context of refused insurance policy payments); In re Smith, 524 B.R. 125, 135-36 (S.D.

Tex. 2015)(allowing common law claim against bank for its wrongful refusal of a payoff that

would discharge deed of trust).

           U.S. Bank responds to Mulvey’s argument in two ways. First, it notes that the statute of

frauds precludes any of the oral statements referenced in Mulvey’s affidavit from varying the terms

of the note.2 Modifications to mortgages that exceed $50,000 are subject to the statute of frauds.

TEX.BUS.&COM.CODE ANN.§ 26.02(b)(“A loan agreement in which the amount involved in the

loan agreement exceeds $50,000 in value is not enforceable unless the agreement is in writing and

signed by the party to be bound or by that party’s authorized representative.”); see Miller v. BAC

Home Loans Servicing, L.P., 726 F.3d 717, 726 (5th Cir. 2013)(“It is well-settled in Texas that

agreements pertaining to loans in excess of $50,000 must be in writing, including modifications

of those agreements.”); Kiper v. BAC Home Loans Servicing, LP, 884 F.Supp.2d 561, 571 (S.D.

Tex. 2012)(“The statute of frauds bars and makes unenforceable oral modifications to a loan

agreement under § 26.02 unless they fall within an exception to the statute of frauds or do not



2
    The note contains in all caps and bolded the following provision:

           13. NO ORAL AGREEMENTS

           THIS NOTE CONSTITUTES A ‘WRITTEN LOAN AGREEMENT’ PURSUANT TO SECTION
           26.02 OF THE TEXAS BUSINESS AND COMMERCE CODE, IF SUCH SECTION APPLIES.
           THIS WRJTTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
           THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
           CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
           THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                                                           11
materially alter the obligations imposed by the original contract.”)(internal quotation marks

omitted). To the extent that Mulvey claims Wells Fargo orally lead him to believe that he did not

need to make his payments, those alleged statement are barred by the statute of frauds.

       U.S. Bank also responds that Mulvey failed to show that he made a proper tender. We

agree. A tender is an unconditional offer by a debtor or obligor to pay another, in current coin of

the realm, a sum not less in amount than that due on a specified debt or obligation. Baucum v.

Great Am. Ins. Co. of New York, 370 S.W.2d 863, 866 (Tex. 1963). The tender described in

Mulvey’s affidavit suffers from two problems--it was not made at the proper place and time, and

does not account for all the payments due up to the time of acceleration.

       Tender must be at the place provided in the contract for performance. 13 Sarah Howard

Jenkins, Corbin on Contracts, § 67.7 (2003)(“Tender must be made at the time and place required

by the contract.”); 58 Tex.Jur.3rd, Payment, § 8 (2013), at 16 (“Where an obligation is made

payable at a certain place, tender of payment must be made at that place.”). Failure to tender at

the place designated by the contract belies a proper tender. Scott v. Grant, 84 S.W. 265, 266

(Tex.Civ.App. 1904, writ ref’d)(“[W]e hold that the plaintiff’s petition was insufficient and failed

to disclose a cause of action, because it failed to show either payment or tender of the purchase

money at the place required by the contract, and failed to furnish a sufficient excuse for

noncompliance on the plaintiff’s part.”). The note required payments be made on the first day of

each month at “P.O. BOX 17339, BALTIMORE, MD 21297-4339 or at a different place if

required by the Note Holder.” Mulvey swore that sometime in July or August of 2009 he tried to

tender “a payment at the Wells Fargo Bank[.]” He never established that the physical bank location

was allowed or required by note holder.




                                                12
       Second, Mulvey swore that he tried to make one monthly payment around July or August

of 2009 (though the payment was due on the 1st of July). He does not claim to have made tender

of any additional monthly payments, nor does his response or briefing explain how a refusal to

accept that single payment excused his performance for all the subsequent payments. U.S. Bank’s

summary judgment was premised on a default of all the payments from July 1, 2009 through

November 22, 2010 when the note was accelerated. Mulvey does not show that the improper

refusal of a single payment excused all the subsequent payments not made under the loan.

       In summary, we overrule Mulvey’s single issue and affirm the trial court’s judgment.


December 19, 2018
                                    ANN CRAWFORD McCLURE, Chief Justice

Before McClure, C.J., Rodriguez, and Palafox, JJ.




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