Yellowfin’s Debt Collection Fraud: Chasing Unsecured Loans in Texas from Financial Crisis-Era Loans

LIT Commentary

Unconventional Legal Twists: The Persistence of Decade-Old Debts and the Yellowfin Controversy

Motion for rehearing filed

Thompson v. Yellowfin Loan Servicing Corp., No. 01-21-00147-CV (Tex. App. Jan. 3, 2023)

APR 20, 2023 | REPUBLISHED BY LIT: AUG 29, 2023

WHAT LIT’s WORKIN’ ON TODAY
The Judiciary in Texas is really tryin’ very hard become the dirtiest of the executioners in black robes. The second loan or junior lien litigation from 2008 is absolutely farcical. How Yellowfin debt buyers can “foreclosure” is even more disturbing. pic.twitter.com/4DbQsYylKa

— lawsinusa (@lawsinusa) August 28, 2023

Yellowfin Fraud Series by Lit Chronicles 75-Yr-Old Oscar Byrd’s Second Brush with Texas Judicial Malfeasance – Laws In Texas https://t.co/pIpX3gEVl2

— lawsinusa (@lawsinusa) August 29, 2023

Thompson v. Yellowfin Loan Servicing Corp.

No. 01-21-00147-CV

(Tex. App. Jan. 3, 2023)

 REPUBLISHED BY LIT: AUG 29, 2023

MEMORANDUM OPINION

After appellant Latanya Thompson defaulted on a promissory note, the holder of the note, appellee Yellowfin Loan Servicing Corp., as successor in interest to IndyMac Bank, F.S.B. (Yellowfin), accelerated all payments due under the note and, when Thompson still did not pay, sued to recover the balance owed.

Yellowfin moved for summary judgment on its breach of contract claim against Thompson. The trial court granted the motion and awarded Yellowfin its claimed damages.

On appeal, Thompson raises seven numbered issues, many of which overlap. In essence, Thompson (1) challenges the negotiability of and Yellowfin’s standing to enforce the promissory note, (2) asserts a limitations defense, and (3) contends that Yellowfin failed to meet its summary judgment burden.

We affirm.

Background

On May 20, 2005, Thompson executed two loans to purchase a residential property.

The first loan was for $212,000 (the First Loan)

and the second was for $53,000 (the Second Loan).

The Second Loan is at issue in this case and consists of a promissory note (the Note), secured by a deed of trust identified as the “secondary lien” (the Deed of Trust) encumbering real property located at 18930 Brighton Trails in Tomball, Texas (the Property).1

Thompson obtained both loans from IndyMac Bank, F.S.B.

Under the Note, Thompson agreed to make monthly payments in the amount of $460.22 for fifteen years, with a final balloon payment of $43,595.95, due on June 1, 2020.

The Note’s original principal balance was $53,000 with an interest rate of 9.875 percent.

1           The First Loan was also secured by a deed of trust encumbering the Property.

Thompson defaulted on her payments and the mortgagee of the First Loan, which at the time of foreclosure was Deutsche Bank National Trust Company, foreclosed on the loan in July 2007.

The Property sold for $225,000.

The proceeds from the foreclosure satisfied the First Loan and extinguished all junior liens, including the lien underlying the Note.2

In 2019, Yellowfin purchased the Note as part of a pool of mortgage notes sold by RCS Recovery Services, LLC (RCS).

In January 2020, Yellowfin sent Thompson notice of the purchase. Yellowfin then sent a notice of intent to accelerate the payments due under the Note as a result of Thompson’s default.

Yellowfin informed Thompson that it “agreed to waive and forgive the monthly installment payments due through 6/1/2019,” making the new “post waiver principal balance, as of 7/1/2019, [] $44,333.62.”

Per the notice, Thompson had thirty days to cure the default; if she did not, Yellowfin intended to accelerate the Note.

Thompson did not timely cure, and in March 2020, Yellowfin accelerated all payments due under the Note.

Thompson did not remit payment.

Yellowfin sued Thompson for breach of the Note and alleged that the amount owed under the Note was $44,333.62.

This amount did not include any amount owed

2  “It is well settled in Texas that a valid foreclosure on a senior lien (sometimes referred to as a ‘superior’ lien) extinguishes a junior lien (sometimes referred to as ‘inferior’ or ‘subordinate’) if there are not sufficient excess proceeds from the foreclosure sale to satisfy the junior lien.” I-10 Colony, Inc. v. Lee, 393 S.W.3d 467, 472 (Tex. App.—Houston [14th Dist.] 2012, pet. denied).

but not paid prior to June 1, 2019; Yellowfin waived its right to collect those amounts.

Thompson counterclaimed for fraud and violation of the Texas Debt Collection Practices Act (TDCPA).

Yellowfin moved for summary judgment on its claim.

Thompson responded and raised the arguments she raises on appeal, which we discuss in more detail below.

The trial court granted Yellowfin’s motion, awarded $44,333.62 in damages, and awarded trial and conditional appellate attorney’s fees, court costs, and post- judgment interest.

The trial court also ordered Thompson take nothing on her counterclaims. Thompson appealed.

Issues Presented

Thompson presents seven numbered issues for review, which we copy here verbatim. We address overlapping issues together, when appropriate.

1.     Was there just a single transaction between IndyMac Bank, F.S.B. as the lender and Ms. Thompson as the borrower when both simultaneous loans between the parties were used to finance just one house?

2.     Is the two-year limitations period in TEX. PROP. CODE § 51.003 applicable to the Note when there was only one lender who financed the purchase of the property and the foreclosure of the First Loan by that lender voided the lender’s lien for the Note?

3.     Is the four-year limitations period in TEX. CIV. PRAC. & REM. CODE § 16.004 applicable to the Note when the lender’s cause of action contractually arose no later than the date of foreclosure of the First Loan in 2007?

4.     Is a right that a lender gave itself to sue on a debt for a default on another debt waived if it is not exercised for thirteen years after the original lender contractually caused it to accrue when it foreclosed?

5.     Is the Note still an obligation “secured by a real property lien” when it was acquired by a debt buyer twelve years after the lien against the property was voided by a foreclosure?

6.     When there are no servicing records for a 2005 loan can a guess by [a] stranger to the loan in 2019 for the amount that might be owed by the borrower meet [the] summary judgment standard in TEX. R. CIV. P. 166a?

7.     Does the clear instruction in the Note requiring an undertaking by the borrower to “tell the Note Holder in a letter that I am doing so” before making a prepayment destroy its negotiability because it keeps the document from meeting the definition of an “unconditional promise or order” required by TEX. BUS. & COM. CODE §§ 3.104(a) and 3.106?

Standard of Review

We review a trial court’s granting of summary judgment de novo.

Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007).

We review the evidence presented in the light most favorable to the nonmoving party.

Mann Frankford Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).

The moving party bears the burden of showing there is no genuine issue of material fact and it is entitled to judgment as a matter of law.

TEX. R. APP. P. 166a(c); Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018).

When a plaintiff moves for summary judgment on its own claim, it must prove that it is entitled to judgment as a matter of law on each element of its cause of action.

Castillo Info. Tech. Servs., LLC v. Dyonyx, L.P., 554 S.W.3d 41, 45 (Tex. App.—Houston [1st Dist.] 2017, no pet.).

Analysis

A.               Negotiability of and Standing to Enforce the Note

In her seventh issue, Thompson argues that the Note was not a negotiable instrument and that Yellowfin had no standing to enforce it.

Because standing implicates a court’s subject matter jurisdiction, we address this issue first.

See Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445–46 (Tex. 1993); David Powers Homes, Inc. v. M.L. Rendleman Co., Inc., 355 S.W.3d 327, 333 (Tex. App.— Houston [1st Dist.] 2011, no pet.).

“The negotiability of an instrument is a question of law.”

Guniganti v. Kalvakuntla, 346 S.W.3d 242, 248 (Tex. App.—Houston [14th Dist.] 2011, no pet.).

In Texas, negotiable instruments are governed by the Uniform Commercial Code (UCC), as adopted by the Texas Legislature and codified in the Texas Business and Commerce Code.

See Amberboy v. Societe de Banque Privee, 831 S.W.2d 793, 793 (Tex. 1992); TEX. BUS. & COM. CODE tit. 1, §§ 1.10112.004 (UCC).

“Negotiable instrument” means an “unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order,” so long as the promise or order “does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money[.]”

TEX. BUS. & COM. CODE § 3.104(a).

A promise or order is unconditional unless it states an express condition to payment, that the promise or order is subject to or governed by another record, or that rights or obligations with respect to the promise or order are stated in another record.

Id. § 3.106(a).

Thompson does not dispute that the Note is a promise to pay.

However, Thompson argues that the Note is rendered non-negotiable under Section 3.106(a) because the Note also includes “an express condition to payment,” in that it required Thompson to provide the lender written notice of prepayment of principal.

According to Thompson, this prepayment-notice requirement imposes an “other undertaking” on Thompson, the borrower, to do an “act in addition to the payment of money.”

See id. § 3.104(a).

Thompson contends the inclusion renders the Note non-negotiable, and therefore, it could not have been negotiated by an indorsement under Chapter 3 of the Business and Commerce Code as Yellowfin attempted to do.

Thus, according to Thompson, Yellowfin did not have standing to enforce the Note.

Section 6 of the Note states:

Our sister court in Fort Worth recently considered, and rejected, a similar argument.

See Tapia v. Collins Asset Group, LLC, No. 02-20-00129-CV, 2022 WL 325392, at *4 (Tex. App.—Fort Worth Feb. 3, 2022, no pet.) (mem. op.).

In Tapia, the borrower signed a promissory note that contained the same language quoted above related to notice of prepayment. Id. at *1.

On appeal, the borrower argued that this provision in the note made it conditional and not a negotiable instrument. Id. at*4. The court rejected this argument and concluded that the “general requirement that a maker give written notice of any principal prepayment is not a negotiability- destroying ‘other undertaking’ because a maker’s ability to prepay a loan is a discretionary benefit, not a burden[.]” Id.

Citing a number of cases from other jurisdictions to consider the issue, the court explained that “the right of prepayment is a voluntary option that defendants may elect to exercise solely at their discretion. Indeed, such an allowance confers a benefit, not a burden, upon defendants, who can freely choose to decline the opportunity.” Id.

(citing In re Walker, 466 B.R. 271, 283 (Bankr. E.D. Pa. 2012); HSBC Bank USA, N.A. v. Gouda, 2010 WL 5128666, at *3

(N.J. Super. App. Div. Dec. 17, 2010) (per curiam), cert. denied, 17 A.3d 1245 (N.J. 2011); Brichant v. Wells Fargo Bank, N.A., No. 3:12-CV-0285, 2014 WL 11515845,at *4 (M.D. Tenn. Feb. 24, 2014)).

Accordingly, because principal prepayment was an option wholly within the borrower’s control to exercise, the court held that any addendum to that option did not convert her promise to pay the note from an absolute to a conditional one. Id.

We agree with this analysis. The Note here contained the same language as in Tapia.

Prepayment of the principal under the Note is voluntary, not required, and we decline to hold that the inclusion of this provision constitutes an “other undertaking” or “express condition to payment” that destroys the negotiability of the Note.

See id.; PNC Mortgage v. Howard, 618 S.W.3d 75, 86 (Tex. App.—Dallas 2019), rev’d on other grounds, 616 S.W.3d 581 (Tex. 2021)

(stating that notice of prepayment was “incidental to the note’s unconditional promise to pay” and court was unaware of any authority to support conclusion that “notice provisions of this sort would render the note non-negotiable”).

Having found that the Note was a negotiable instrument, we conclude that Yellowfin established it was the holder of the Note, and therefore, had standing to enforce the Note.

See Leavings v. Mills, 175 S.W.3d 301, 309 (Tex. App.—Houston [1st Dist.] 2004, no pet.)

(“To prevail on a summary judgment motion, a party seeking to enforce a note must prove

(1) that a certain note is in question,

(2) that the party sued signed the note,

(3) that the plaintiff is the owner or holder of the note,

and

(4) that a certain balance is due and owing on the note.”).

A holder of an instrument is a “[p]erson entitled to enforce” an instrument. Id.

“A person can become the holder of an instrument when the instrument is issued to that person; or he can become a holder by negotiation.”

U.C.C. cmt. 1, TEX. BUS. & COM. CODE § 3.201.

Negotiation is the “transfer of possession of an instrument . . . by a person other than the issuer to a person who thereby becomes its holder.”

TEX. BUS. & COM. CODE §3.201(a); Leavings, 175 S.W.3d at 309.

“[I]f an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder.”

TEX. BUS. & COM. CODE § 3.201(b); Leavings, 175 S.W.3d at 309.

“The indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed to it as to become part of it.” Leavings, 175 S.W.3d at 309.

“If an instrument not in the possession of the original holder lacks a written indorsement and proof of the chain of title, the person in possession does not have the status of a holder.” Id.

The summary judgment evidence demonstrates that Yellowfin has possession of the Note and that the allonges are attached to the Note. Matt Miller, Yellowfin’s custodian of records, testified that Yellowfin acquired the Note on August 29, 2019, “as part of a pool of mortgage notes being sold by RCS Recovery Services, LLC.”

Miller also testified that Yellowfin has possession of the original Note and that the allonges are affixed and attached to the Note.

Miller attached a copy of the Note, to which a series of putative indorsements and allonges were affixed,3 as well as the purchase and sale agreement between RCS and Yellowfin.

The first indorsement shows that IndyMac indorsed the Note to Trinity Financial Services.

Trinity Financial Services then executed an allonge to RCS, which then sold the Note and executed an allonge to Yellowfin.

We conclude that the indorsements and allonges

3   An indorsement is the placing of a signature, sometimes with an additional notation, on the back of a negotiable instrument to transfer or guarantee the instrument or to acknowledge payment. See “Indorsement,” BLACK’S LAW DICTIONARY (11th ed. 2019).

An allonge is “[a] slip of paper sometimes attached to a negotiable instrument for the purpose of receiving further indorsements when the original paper is filled with indorsements.” See “Allonge,” BLACK’S LAW DICTIONARY (11th ed. 2019).

on the Note, as well as the purchase and sale agreement between RCS and Yellowfin, constitute more than a scintilla of evidence of the transfer of the possession of the Note from the original owner, IndyMac, to the ultimate owner, Yellowfin.

See Santos v. Yellowfin Loan Servicing Corp., No. 14-21-00151-CV, 2022 WL 2678846, at *4 (Tex. App.—Houston [14th Dist.] July 12, 2022, pet. filed) (mem. op.) (holding similar evidence of note, indorsements, allonges, and purchase and sale agreement, was sufficient evidence that ownership of note was transferred to Yellowfin, even though presumption of ownership upon transfer did not apply under the UCC).

Thus, Yellowfin met its summary judgment burden to establish that it was the owner or holder of the Note. Thompson did not offer any controverting evidence that would raise a fact issue on Yellowfin’s status as holder of the Note.

We overrule Thompson’s seventh issue.

B.                Statute of Limitations

In her first, second, third, and fifth issues, Thompson argues that Yellowfin’s claim was time-barred. According to Thompson, the Note was part of a single loan agreement and transaction between Thompson and IndyMac; the lender foreclosed on the First Loan in 2007 extinguishing all junior liens; and any right to enforce the Note accrued upon foreclosure.

Thus, Thompson contends, the statute of limitations expired two years, or at the latest four years, after foreclosure, or in 2009 or 2011, at the latest. Because Yellowfin did not file suit until 2020, Thompson argues the suit is time-barred.

Thompson and Yellowfin disagree on when Yellowfin’s claim accrued and which statute of limitations applies to Yellowfin’s claim.

Yellowfin contends that its claim did not accrue until it accelerated the note, and the six-year limitations period applicable to an action to enforce a promissory note found in the UCC applies.

See TEX. BUS. & COM. CODE § 3.118 (providing statute of limitations to sue on negotiable instruments is six years).

Thompson, in contrast, argues that Yellowfin’s claim accrued at the point of foreclosure, and either the two-year limitations period for deficiency claims applies, see TEX. PROP. CODE § 51.003(a) (if sale price from foreclosure is less than unpaid balance of indebtedness, action to recover deficiency must be brought within two years of foreclosure sale), or, alternatively, the four-year limitations period for a claim for a debt applies.

See TEX. CIV. PRAC. & REM. CODE § 16.004(a)(3)

(suit for cause of action for debt must be brought within four years). The Fourteenth Court of Appeals analyzed this question in a recent factually similar case also brought by Yellowfin. See Santos, 2022 WL 2678846, at *4–6. There, just like here, the borrower obtained two loans to purchase real property from the same lender. Id. at *1.

The second loan was at issue in Santos, which consisted of a promissory note secured by a deed of trust. Id. The borrower defaulted and the mortgagee foreclosed on the first loan in 2007. Id.

The proceeds from the foreclosure satisfied the first loan and extinguished all junior liens, including the lien underlying the note on the second loan. Id.

In 2019, Yellowfin purchased the outstanding note and became the putative current owner and holder of the note. Id.

Yellowfin sent the borrower notice of the purchase and a notice of intent to accelerate the payments due under the note as a result of the borrower’s default. Id.

Per the notice, the borrower had thirty days to cure the default; if she did not, Yellowfin intended to accelerate the Note. Id.

The borrower did not timely cure, and Yellowfin accelerated all payments due under the Note. Id. The borrower did not remit payment. Id.

As in this case, the borrower in Santos argued that the cause of action accrued at the time of foreclosure and was barred by the two-year statute of limitations for deficiency claims. Id. at *5.

The Fourteenth Court explained that when a borrower is sued after real property is sold at a foreclosure sale, and judgment is sought against the borrower because the foreclosure sales price is less than the amount owed, “then

(1) the suit is for a ‘deficiency judgment,’

(2) the suit must be brought within two years of the foreclosure sale,

and

(3) the suit is governed by § 51.003.” Id.

(quoting PlainsCapital Bank v. Martin, 459 S.W.3d 550, 555 (Tex. 2015)).

“But when a senior lienholder forecloses on its lien, and the proceeds of that sale do not satisfy the debt from a junior lien, section 51.003 does not apply to the junior lienholder’s suit to recover the value of its note.

This is because the junior lienholder has not foreclosed on its lien; only the senior lienholder has.” Id

Because Yellowfin (or its predecessor-in-interest), as the junior lienholder, did not foreclose on the note, and only the separate lender as the senior lienholder foreclosed on its lien, the court held that Yellowfin was not seeking a deficiency judgment from the foreclosure sale and Section 51.003 did not apply.

Id. at *6.

This Court previously considered a similar issue in Mandarino v. Sherwood Lane Investments, LLC, No. 01-15-00192-CV, 2016 WL 4034568 (Tex. App. Houston [1st Dist.] July 26, 2016, no pet.) (mem. op.).

There, appellants purchased a third party’s ownership interest in an apartment complex and signed a promissory note with the third party as payee. Id. at *1.

The third party still owed a portion of the principal from its original purchase of the apartment complex (the “First Lien Principal”), which it incorporated into the new promissory note. Id.

The original note on the First Lien Principal was designated the “wrapped note” and the note signed by appellants was named the “wraparound note.” Id.

The senior lienholder, who had possession of the wrapped note, foreclosed on its lien after appellants defaulted on their obligations to both notes. Id. at *8. However, the proceeds of that sale did not satisfy any of the debt from the junior lien, which was the wraparound note. Id.

The junior lienholder sued to recover the unpaid balance of its note, and appellants argued that section 51.003 applied to time-bar the suit. Id. at *2, 7.

But we held that the section did not apply because the junior lienholder did not foreclose on its lien and, thus, was not seeking a deficiency judgment when it sued on the wraparound note. Id. at *8.

Because we concluded that the junior lienholder was not seeking a deficiency judgment when it sued on its promissory note, it was not subject to the statute of limitations for deficiency judgments. Id.

The same is true here.

The senior lienholder, which at the time of foreclosure was Deutsche Bank, foreclosed on the First Loan—Yellowfin (or its predecessor-in- interest) did not.

Although the proceeds from the 2007 foreclosure sale did not satisfy the debt owed under the Note, there was no foreclosure by Yellowfin.

That IndyMac was the original lender for both the First Loan and the Second Loan does not change the outcome—they were separate transactions that created separate obligations.

Thompson’s obligation to pay on the Note was not eliminated by the foreclosure of the First Loan and extinguishment of the junior lien securing the Note.

See Poston v. Wachovia Mortg. Corp., No. 14-11-00485-CV, 2012 WL 1606340, at *2 (Tex. App.—Houston [14th Dist.] May 8, 2012, pet. denied) (mem. op.)

(“Therefore, when a junior lien is extinguished by foreclosure on a superior lien, the unpaid portion of the loan that was secured by the junior lien merely becomes an unsecured debt for which the lender may obtain a money judgment. Consequently, Wachovia’s right to obtain a money judgment based on the Postons’ failure to repay the second note was not eliminated by foreclosure of the superior lien and extinguishment of the junior lien securing payment of the second note.”

(internal citations omitted)).

Therefore, as the Fourteenth Court of Appeals held in Santos, we hold that Yellowfin is not seeking a deficiency judgment from the 2007 foreclosure sale and Section 51.003 does not apply to Yellowfin’s suit. See Santos, 2022 WL 2678846, at *5–6; see also Mandarino, 2016 WL 4034568, at *7–8.

Rather, having concluded above the Note is a negotiable instrument, we agree with Yellowfin that Section 3.118 of the Texas Business and Commerce Code is the appropriate statute of limitations.

See Mandarino, 2016 WL 4034568, at *8 (applying Section 3.118 to action to enforce promissory note);

Aguero v. Ramirez, 70 S.W.3d 372, 374 (Tex. App.—Corpus Christi–Edinburg 2002, pet. denied)

(concluding that “where there is a debt secured by a note, which is, in turn, secured by a lien, the note and lien constitute separate obligations,” and therefore, because plaintiff sued to enforce payment only on promissory note—and did not sue to enforce lien, deed of trust, or foreclose on real property—six-year statute of limitations in Section 3.118 applied).

Section 3.118 states that an action to enforce a promissory note “must be commenced within six years after the due date . . . stated in the note or, if a due date is accelerated, within six years after the accelerated due date.”

TEX. BUS. & COM. CODE § 3.118(a).

The date of maturity on the Note was June 1, 2020, and Yellowfin produced evidence that it accelerated the Note on March 25, 2020, three months before filing suit and well within the six-year limitations period.

Thus, in the absence of any evidence that the Note had been accelerated previously, the March 2020 acceleration date triggered the running of the statute of limitations.

See Mandarino, 2016 WL 4034568, at *8

(holding that statute of limitations was six years after due date stated in note in absence of evidence that note was accelerated).

Citing to Paragraph 21 of the Deed of Trust, Thompson contends that “it was the payment defaults on the First Loan that contractually caused the accrual of IndyMac’s cause of action to enforce both the First Loan and the Note and led to the July 3, 2007 foreclosure.” Paragraph 21 states:

21. Senior Liens. Borrower shall perform all of Borrower’s obligations under any deed of trust, security instrument or other security agreement, which has priority over this Security Instrument, including Borrower’s covenants to make payments when due.

Borrower agrees that should default be made in the payment of any note secured by an[y] prior valid encumbrance against the Property, or in any of the covenants of any prior deed of trust or other security agreement, then the Note secured by this Security Instrument, at the option of Lender, shall at once become due and payable.

Lender may, but shall not be obligated to, advance monies to protect Lender’s lien position and add the amount of such advances to Borrower’s loan amount.

(Emphasis added).

Paragraph 21 gives the lender the right, but does not require the lender, to accelerate the balance on the Note based on an existing default under the terms of an obligation secured by a superior lien, such as the First Loan.

Paragraph 21, therefore, contains an optional acceleration clause but does not require the lender to automatically accelerate the loan upon default on an obligation secured by a superior lien.

Thus, paragraph 21 does nothing to change the rule under Section 3.118 that a cause of action for enforcement of a note accrues upon maturity or acceleration.

See TEX. BUS. & COM. CODE § 3.118(a);

see also Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 566 (Tex. 2001)

(“If 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. Rather, the action accrues only when the holder actually exercises its option to accelerate.”).

Thompson did not introduce any evidence demonstrating that a predecessor-in-interest to Yellowfin exercised its right to optional acceleration at the time of foreclosure, or at any other time prior to Yellowfin’s acceleration of the Note in March 2020.

Accordingly, Thompson did not raise a fact issue regarding her affirmative defense that Yellowfin’s claim accrued outside the applicable limitations period.

See Santos, 2022 WL 2678846, at*6.

We overrule Thompson’s first, second, third, and fifth issues.

C.               Propriety of Summary Judgment

In her sixth issue, Thompson argues Yellowfin failed to meet its summary judgment burden under Texas Rule of Civil Procedure 166a. Specifically, Thompson argues that Yellowfin did not offer competent summary judgment proof of the amount of damages claimed. According to Thompson, the amount sought by Yellowfin was a “naked guess.”

Matt Miller, the custodian of records for Yellowfin, testified by affidavit:

According to [Yellowfin’s] records, [Thompson] owes a balance of $44,333.62. [Yellowfin] is not accruing pre-judgment interest.

The balance owed was calculated by conducting an amortization of the original principal amount of the Note in accordance with the terms prescribed by the Note

(ie: an amortization of $53,000.00 over fifteen years with interest accruing at a rate of 9.875%, and a final balloon payment of $43,595.95)

then assuming that each and every payment was timely made through June 1, 2019.

To the extent any payment was not made prior to June 1, 2019, Yellowfin waives its right to collect that payment and is not seeking to recover any portion of that payment through this lawsuit.

Courts in Texas have held that similar evidence, such as an affidavit simply setting forth the balance due on the note, is sufficient to sustain an award of summary judgment; detailed proof is not required.

See HHH Farms, L.L.C. v. Fannin Bank, 648 S.W.3d 387, 405 (Tex. App.—Texarkana 2022, pet. filed)

(“A lender is not required to file detailed proof [of] the calculations reflecting the balance due on a note; an affidavit by a bank employee which sets forth the total balance due on a note is sufficient to sustain an award of summary judgment.”);

FFP Mktg. Co., Inc.v. Long Lane Master Tr. IV, 169 S.W.3d 402, 411 (Tex. App.—Fort Worth 2005, no pet.)

(“In a cause of action on a promissory note, the plaintiff must establish the amount due on the note. Generally, an affidavit that sets forth the total balance due on a note is sufficient to sustain an award of summary judgment. Detailed proof of the balance is not required.”);

Das v. Deutsche Bank Nat’l Tr. Co., No. 05-12-01612- CV, 2014 WL 1022385, at *2 (Tex. App.—Dallas Mar. 5, 2014, pet. denied) (mem. op.)

(accepting affidavit testimony from employee of “[loan] servicing agent” as valid evidence of balance due and owing on note, given employee’s testimony that he had verified and researched loan’s history and current account information on behalf of holder, Deutsche Bank);

Albright v. Regions Bank, No. 13-08-00262-CV, 2009 WL 3489853, at *4 (Tex. App.—Corpus Christi—Edinburg Oct. 29, 2009, no pet.) (mem. op.)

(“An affidavit made on personal knowledge of the bank officer, which identifies the notes and guaranty and recites the principal and interest due . . . is sufficient to support a summary judgment motion.”);

Greene v. Deutsche Bank Nat’l Tr. Co., No. 01-04-00483-CV, 2005 WL 1244604, at *1, 3 (Tex. App.—Houston [1st Dist.] May 26, 2005, pet. denied) (mem. op.)

(accepting the affidavit of manager for “loan servicing agent” as person sufficiently situated to testify on balance owed, based on synthesis of eleven records related to loan’s account history).

Moreover, in Santos, the Fourteenth Court of Appeals held that almost identical testimony was sufficient summary judgment evidence to establish the amount owed on the outstanding note.

Santos, 2022 WL 2678846, at *7.4 Thompson

4         In Santos, Yellowfin’s custodian of records testified as follows:

According to Plaintiff’s records, Defendant owes a balance of $21,023.13. Plaintiff is not accruing pre-judgment interest.

The balance owed was calculated by conducting an amortization of the original principal amount of the Note in accordance with the terms prescribed by the Note (ie: an amortization of $24,398.00 over twenty years with interest accruing at a rate of 11.25 %, and a final balloon payment of $17,263.03)then assuming that each and every payment was timely made through May 1, 2019. To the extent any payment was not made prior to June 1, 2019, Yellowfin waives its right to collect that payment and is not seeking to recover any portion of that payment through this lawsuit.

Santos v. Yellowfin Loan Servicing Corp., No. 14-21-00151-CV, 2022 WL 2678846, at *7 (Tex. App.—Houston [14th Dist.] July 12, 2022, pet. filed) (mem. op.).

did not present any evidence that she owed a different amount of money or that she was entitled to any credits or offsets (beyond the amounts waived by Yellowfin through June 2019).

See id.

Accordingly, we hold that Yellowfin carried its summary judgment burden to show its entitlement to the damages awarded by the trial court.

We overrule Thompson’s sixth issue.

D.               Remaining Issues

In her fourth issue, Thompson argues Yellowfin’s right to sue on a debt was waived because it took no action on it for more than thirteen years after its claim contractually accrued.

This issue is premised on Thompson’s mistaken contention that Yellowfin’s claim to enforce the Note accrued upon the 2007 foreclosure.

We have already explained why Thompson’s position on accrual lacks merit. Accordingly, we overrule Thompson’s fourth issue.

Conclusion

We affirm the trial court’s judgment.

Amparo Guerra Justice

Panel consists of Justices Kelly, Rivas-Molloy, and Guerra.

Lehman Brothers Robosigned Note Resurfaces: LIT’s Yellowfin Fraud Series Digs Deeper – Laws In Texas https://t.co/iMRSlOqGlk

— lawsinusa (@lawsinusa) August 29, 2023

Who is Matthew D. “Matt” Miller, founder of Yellowfin?

As a Third-Party Debt Collector, Craig Noack of The Noack Law Firm’s Debt Collectin’ Activities and Judgments are Void

Noack Did Not Hold an Active Surety Bond with the State of Texas to Collect Debts for Clients at the time of Filing these Yellowfin Lawsuits