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Wease v. Ocwen Loan Servicing, L.L.C. - 915 F.3d 987 (5th Cir. 2019)

Rule:

In Texas, breach of contract requires four elements: (1) a valid contract, (2) plaintiff's performance, (3) defendant's breach, and (4) resulting damages. To determine the meaning of contractual terms, Texas courts focus on the parties' intentions as expressed in the contract itself. A court must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. The starting point is the express language, which a court will strictly construe when reading a deed of trust. A court will interpret those terms as a matter of law if they carry a certain or definite legal meaning or interpretation. Whether the contract is ambiguous is itself a question of law for the court to decide. If a court finds the contract ambiguous, its correct reading presents a jury question. 

Facts:

In 2003, Michael Wease executed a home equity note on his Texas property and secured the loan with a deed of trust. Wells Fargo Bank, N.A., is the current beneficiary of the deed of trust and Ocwen Loan Servicing, L.L.C., the loan servicer. Among the promises the parties exchanged was the Escrow Waiver Agreement (the “Waiver Agreement”), which was appended to the deed of trust. It provided that the lender would elect not to collect monthly escrow deposits to pay real estate taxes subject to the condition that all real estate taxes are paid when due, and evidence is furnished to lender at that time. For seven years, the arrangement functioned amicably. But in April 2010, Wease's loan servicer—then HomEq Servicing—sent Wease a letter advising him that HomeEq had performed an "examination of past due property taxes" which revealed that Wease was "delinquent" on his taxes for the prior year (2009). The letter requested that Wease pay the taxes within 30 days of the date of the notice or, if he had already paid the taxes, that he forward proof of payment. Five days later, HomEq sent an identical letter. Wease did not pay his 2009 property taxes until June 30, 2010. Six weeks later, Wease received a "Notice of Transfer" dated August 11, 2010. This letter informed him that Ocwen would replace HomEq as servicer. On December 16, 2010—without prior notice—Ocwen paid Wease's 2010 property taxes. Unaware of Ocwen's payment, Wease paid his 2010 taxes in January 2011; the tax authorities subsequently refunded that amount. Wease defaulted in August 2011. He attempted to cure by sending partial payments in October and November, but Ocwen rejected them and, on January 3, 2012, sent a notice of default and intent to accelerate. Ocwen sent a notice of acceleration. Wease responded with this lawsuit.

Issue:

Did the district court err in granting summary judgment to defendants given that there were two plausible readings of the contract?

Answer:

Yes

Conclusion:

The Court held that the district court erred by granting summary judgment to defendants, because there was ambiguity in the contract's escrow provisions, when there were two plausible readings of the contract.  The Court further held that the district court properly granted summary judgment in favor of the loan servicer on the Real Estate Settlement Procedures Act claim, because the borrower neglected to send his letters to the servicer's exclusive qualified written request address.

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