George Matthew Culberson and Sarah Elizabeth Culbertson v. Wells Fargo USA Holdings, Inc., Wells Fargo, N.A., Wells Fargo Home Mortgage, Inc. Steve Ranney, and Matthew Krueger

Judgment rendered June 29, 2022.
Application for rehearing may be filed
within the delay allowed by Art. 2166,
La. C.C.P.

No. 54,545-CA

COURT OF APPEAL
SECOND CIRCUIT
STATE OF LOUISIANA

*****

GEORGE MATTHEW Plaintiffs-Appellants
CULBERSON AND SARAH
ELIZABETH CULBERTSON

versus

WELLS FARGO USA HOLDINGS, Defendants-Appellees
INC., WELLS FARGO, N.A.,
WELLS FARGO HOME
MORTGAGE, INC. STEVE
RANNEY, AND MATTHEW
KRUEGER

*****

Appealed from the
First Judicial District Court for the
Parish of Caddo, Louisiana
Trial Court No. 614,421

Honorable Michael A. Pitman, Judge

*****

ALAN PESNELL LAWYER, LLC Counsel for Appellants
By: W. Alan Pesnell

BURR & FORMAN, LLP Counsel for Appellees,
By: Christopher D. Meyer Wells Fargo USA
Holdings, Inc., Wells
Fargo Bank, N.A., Wells
Fargo Home Mortgage,
Inc.
*****

Before MOORE, COX, and THOMPSON, JJ.

THOMPSON, J.

An active duty servicemember in the United States Air Force and his

wife, who are entitled to certain protections afforded by the Servicemembers

Civil Relief Act, signed a mortgage with Wells Fargo on a property they

owned in Shreveport. Soon after signing the mortgage, the couple filed for

bankruptcy. Whether any payments were made toward the mortgage is

uncertain. Wells Fargo appeared in the bankruptcy proceedings and moved

to have the property abandoned for purposes of eventual foreclosure. The

couple moved to Florida and were granted a discharge under Chapter 7

bankruptcy laws. To date, Wells Fargo has not foreclosed on the property,

steadfastly asserting that the mortgage account remains subject to the

protections of the federal Servicemembers Civil Relief Act. Despite no

evidence of repayment of any of the debt, the servicemember and his wife

filed suit, claiming ownership of the property due to Wells Fargo’s failure to

foreclose against them within five years of the abandonment of the property

in the bankruptcy. They assert that their obligations under the mortgage are

prescribed. We find that the mortgage account is subject to the protections

of the Servicemembers Civil Relief Act, which tolls any state prescriptive

period for the duration of one’s active duty military service, and we affirm

the trial court’s ruling.

FACTS

To afford certain safeguards in civil litigation, including foreclosure

proceedings for active duty members of the armed services, Congress

enacted the Servicemembers Civil Relief Act (“SCRA”), which is a federal

law designed to ease financial burdens on servicemembers during periods of

active duty military service. 50 U.S.C. §§ 3901-4043.

50 U.S.C. § 3936 provides as follows:

§ 3936. Statute of limitations

(a) Tolling of statutes of limitation during military service
The period of a servicemember's military service may not be
included in computing any period limited by law, regulation, or
order for the bringing of any action or proceeding in a court, or
in any board, bureau, commission, department, or other agency
of a State (or political subdivision of a State) or the United
States by or against the servicemember or the servicemember's
heirs, executors, administrators, or assigns.

(b) Redemption of real property
A period of military service may not be included in computing
any period provided by law for the redemption of real property
sold or forfeited to enforce an obligation, tax, or assessment.

(c) Inapplicability to internal revenue laws
This section does not apply to any period of limitation
prescribed by or under the internal revenue laws of the United
States.

On September 19, 2000, George Matthew Culbertson1 began active

duty military service in the United States Air Force. On May 17, 2008, he

and his wife, Sarah Culbertson, (hereinafter collectively referred to as

“appellants”) signed a mortgage with Wells Fargo on a home located at 202

Leland Drive, Shreveport, LA 71105. Wells Fargo funded the loan. Benefits

under the SCRA were applied to appellants’ account at the outset, due to Mr.

Culbertson’s status as active duty military when the mortgage was signed.

On February 17, 2009, approximately 9 months after signing the

mortgage on their house, appellants filed for bankruptcy in the United States

Bankruptcy Court for the Western District of Louisiana. The record is not

1
In the original lawsuit’s caption, George Culbertson’s last name is incorrectly
spelled “Culberson.” The correct spelling, “Culbertson,” will be used herein.

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clear on whether the appellants ever made any effort to repay Wells Fargo.

On October 27, 2009, Wells Fargo moved the bankruptcy court to lift the

automatic stay and to abandon the property, an important and mandatory

first step required for Wells Fargo to begin the process of foreclosing on the

property in an attempt to recover the money owed to it by appellants. On

November 16, 2009, by order of the bankruptcy court, the property was

abandoned in the bankruptcy, which enabled Wells Fargo to take the next

step in a foreclosure proceeding. To date, Wells Fargo has not taken any

further action to foreclose on the property against the active duty

servicemember, Mr. Culbertson.

On March 5, 2012, appellants were granted a discharge under Chapter

7. Their bankruptcy case was closed on April 30, 2012.

On March 11, 2015, Wells Fargo sent Mr. Culbertson a letter with

notice that his loan “was approved for SCRA benefits.” Wells Fargo sent

appellants similar letters over the course of the next few years. Wells Fargo

continued its pattern of behavior and did not proceed further with any action

to foreclose against the appellants.

On October 22, 2018, appellants contacted Wells Fargo via telephone.

Mrs. Culbertson stated that she believed the property had been turned over in

their bankruptcy and was unaware of the SCRA protections on the account.

Wells Fargo informed appellants that the loan was still active, as it was

protected against foreclosure under the SCRA; therefore, foreclosure had not

occurred.

Following an internal review, on January 3, 2019, Wells Fargo sent

appellants another letter confirming that SCRA benefits were applied to their

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mortgage account beginning in 2008. The letter also stated that the

mortgage account was currently receiving benefits under the SCRA. Wells

Fargo did not appear eager to initiate foreclosure proceedings against an

active duty member of the armed services. The letter provided: “If you

would like us to initiate foreclosure proceedings our customer must execute

the Servicemembers Civil Relief Act Waiver of Rights Form (Waiver of

Rights).” The letter included the contact information for appellants to

request a waiver of rights form. The letter concluded:

We want to let you know a bankruptcy filing does not stop
SCRA protections from continuing or being placed on the
account. Even though you are not liable for the debt the lien is
still valid and a foreclosure sale would need to be held. We
apologize for any confusion this situation may have caused you.

The appellants do not claim to have executed a waiver of rights form, and

the record does not indicate that Wells Fargo received a completed waiver of

rights form from appellants.

On February 11, 2019, appellants filed a petition for declaratory

judgment in the Caddo Parish district court, alleging that the debt owed to

Wells Fargo is prescribed pursuant to La C. C. art. 3498, and all rights under

the mortgage are extinguished. La. C. C. art. 3498 is the Louisiana state law

containing the prescriptive period for actions on negotiable and

nonnegotiable instruments. La. C. C. art. 3498 provides that actions on

instruments, whether negotiable or not, and on promissory notes, whether

negotiable or not, are subject to a liberative prescription of five years. This

prescription commences to run from the day payment is exigible.

On January 27, 2021, appellants filed a motion for partial summary

judgment, seeking summary judgment on the ownership of the house at

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issue, and an order declaring the Wells Fargo mortgage cancelled. On

March 15, 2021, Wells Fargo filed a motion for summary judgment seeking

dismissal of the appellants’ claims with prejudice, arguing that the SCRA

tolling provision applied to the mortgage. Wells Fargo asserted that the

mortgage was not prescribed, even though foreclosure had not occurred.

On April 26, 2021, a hearing was held on the cross motions for

summary judgment. Following arguments, the trial judge specifically noted

the plain language of 50 U.S.C. § 3936, emphasizing that the period of a

servicemember’s military service may not be included in computing any

statute of limitations. The trial judge stated: “[i]t’s undisputed that Mr.

Culbertson was a member of the United States Air Force when this property

was purchased. […] 50 U.S.C. § 3936 applies in this matter.” At the

conclusion of the hearing, the trial judge denied appellants’ motion for

partial summary judgment and granted Wells Fargo’s motion for summary

judgment, dismissing appellants’ action with prejudice. This appeal

followed.

LAW AND DISCUSSION

Appellants assert two assignments of error:

Assignment of Error No. 1: The trial court committed legal error in
granting the summary judgment motion of Wells Fargo, by applying the
provisions of 50 U.S.C. 3936.

Assignment of Error No. 2: The trial court committed legal error by
failing to grant summary judgment in favor of Appellants.

Appellate courts review motions for summary judgment de novo,

using the same criteria that govern the district court’s consideration of

whether summary judgment is appropriate. Peironnet v. Matador Res. Co.,

12-2292 (La. 6/28/13), 144 So. 3d 791; Bess v. Graphic Packaging Int’l,

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Inc., 54,111 (La. App. 2 Cir. 11/17/21), 331 So. 3d 490. A motion for

summary judgment is a procedural device used when there is no genuine

issue of material fact for all or part of the relief prayed for by a litigant.

Schultz v. Guoth, 10-0343 (La. 1/19/11), 57 So. 3d 1002. The procedure is

favored and shall be construed to secure the just, speedy, and inexpensive

determination of actions. La. C.C.P. art. 966(A)(2).

A motion for summary judgment shall be granted if the motion,

memorandum, and supporting documents show that there is no genuine issue

as to material fact and that the mover is entitled to judgment as a matter of

law. La. C.C.P. art. 966(A)(3). A fact is material if it potentially ensures or

precludes recovery, affects a litigant’s ultimate success, or determines the

outcome of the legal dispute. A genuine issue of material fact is one as to

which reasonable persons could disagree; if reasonable persons could reach

only one conclusion, there is no need for trial on that issue and summary

judgment is appropriate. Maggio v. Parker, 17-1112 (La. 6/27/18), 250 So.

3d 874; Jackson v. City of New Orleans, 12-2742 (La. 1/28/14), 144 So. 3d

876, cert. denied, 574 U.S. 869, 135 S. Ct. 197, 190 L.Ed. 2d 130 (2014);

Bess, supra. In determining whether an issue is genuine, a court should not

consider the merits, make credibility determinations, evaluate testimony, or

weigh evidence. Bess, supra; Chanler v. Jamestown Ins. Co., 51,320 (La.

App. 2 Cir. 5/17/17), 223 So. 3d 614, writ denied, 17-01251 (La. 10/27/17),

228 So. 3d 1230.

Appellants argue the SCRA’s provision regarding statutes of

limitations, 50 U.S.C. § 3936, does not apply to appellants’ mortgage.

Therefore, Wells Fargo’s failure to foreclose on the property within the five-

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year prescriptive period contained in La. C. C. art. 3498 extinguishes

appellants’ obligation under the mortgage, and they are the owners of the

subject property. Appellants filed for relief in the bankruptcy court and

surrendered the property at issue to the bankruptcy trustee. Appellants note

that Wells Fargo appeared in the bankruptcy proceeding and requested that

the property be abandoned for the express purpose of foreclosure, but never

foreclosed on the property. Appellants seem to argue that Mr. Culbertson’s

initiation of the bankruptcy proceedings constituted a “waiver” of his SCRA

rights on the mortgage account. Further, appellants assert that once the

abandonment of the property in the bankruptcy took place, the five-year

prescriptive period contained in La. C. C. art. 3498 began to run. We

disagree.

Appellants claim that at the point of abandonment of the asset by the

bankruptcy court, there was no further impediment for Wells Fargo to

foreclose. Appellants argue that a suit against the appellants personally was

enjoined by bankruptcy law. Therefore, the foreclosure suit that Wells

Fargo failed to initiated would be in rem, on the property itself, and not

subject to any protection from the SCRA. Therefore, appellants claim that

Wells Fargo could have proceeded with the foreclosure on the property in

rem, and the protections of 50 U.S.C. § 3936 no longer applied to appellants.

Appellants discount the property right they have in ownership of the subject

property as well as their right to receive, as owners, any excess proceeds

above the mortgage that would be generated from the foreclosure sale. The

in rem limitation of Wells Fargo’s rights benefit appellants, as it would stop

Wells Fargo from collecting against them any deficiency between the

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mortgage balance and the foreclosure sale proceeds. The opposite situation

still exists in favor the appellants, as any foreclosure sale proceeds above the

remaining balance of the mortgage would be payable to the appellants.

What the appellants assert as a shield they also wield as a sword.

Wells Fargo argues that the SCRA does apply to appellants’ loan

because Mr. Culbertson was, and still is, an active duty servicemember; he

had been in active duty service for eight years prior to signing the mortgage

with Wells Fargo. Wells Fargo contends that 50 U.S.C. § 3936 of the SCRA

requires any applicable prescriptive period be tolled during a

servicemember’s active duty military service for any claim brought by or

against a servicemember.

As Wells Fargo correctly notes, the SCRA’s tolling command is

“unambiguous, unequivocal, and unlimited.” Conroy v. Aniskoff, 507 U.S.

511, 514, 113 S. Ct. 1562, 1564, 123 L. Ed. 2d 229 (1993). Further, the

tolling provision is mandatory, and there are no exceptions to the

straightforward reading of § 3936. The only critical factor is military

service; once that circumstance is shown, the period of limitations is

automatically tolled for the duration of the service. See In re Puckett,

49,046 (La. App. 2 Cir. 4/17/14), 137 So. 3d 1264.

As noted above, a servicemember may waive the protections of the

SCRA. 50 U.S.C. § 3918 provides, in pertinent part:

(a) In general

A servicemember may waive any of the rights and protections
provided by this chapter. Any such waiver that applies to an
action listed in subsection (b) of this section is effective only if
it is in writing and is executed as an instrument separate from
the obligation or liability to which it applies. In the case of a
waiver that permits an action described in subsection (b), the

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waiver is effective only if made pursuant to a written agreement
of the parties that is executed during or after the
servicemember's period of military service. The written
agreement shall specify the legal instrument to which the
waiver applies and, if the servicemember is not a party to that
instrument, the servicemember concerned.

(b) Actions requiring waivers in writing

The requirement in subsection (a) for a written waiver applies
to the following:

(1) The modification, termination, or cancellation of--

(A) a contract, lease, or bailment; or

(B) an obligation secured by a mortgage, trust, deed, lien,
or other security in the nature of a mortgage.

The record contains no evidence that appellants executed a written waiver of

the SCRA’s protections. Appellants could have done so at any point over

the past ten years. Wells Fargo sent appellants written correspondence on

more than one occasion informing them of the protections on their account

under the SCRA. Wells Fargo also made appellants aware of the

requirement to waive their SCRA rights on the mortgage account in writing,

even though they had filed bankruptcy and their personal obligation had

been discharged. The trial court correctly found that until Mr. Culbertson

waives his SCRA protections, the SCRA tolls the five-year prescriptive

period for foreclosure contained in La. C. C. 3498.

We find that the appellants have failed to provide support for their

contention that the SCRA does not apply to the mortgage at issue.

Appellants cannot point to any law or jurisprudence that would provide an

exception to the mandatory tolling provision of the SCRA in these

circumstances. Further, it is clear from the record that appellants never

executed a waiver of rights form, as required by 50 U.S.C. § 3918.

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Appellants also fail to provide any support or applicable jurisprudence for

their contention that the initiation of the bankruptcy proceedings constitutes

a sufficient waiver of their SCRA rights on the mortgage account, or that a

foreclosure proceeding would be in rem and not subject to the protections of

the SCRA. Accordingly, the five-year prescriptive period contained in La.

C. C. art. 3498 has been tolled on the mortgage for the entirety of Mr.

Culbertson’s active duty military service. Wells Fargo’s time to foreclose

on the property has not prescribed, as the prescriptive period has not started

to run. As such, the appellants’ obligations on the mortgage have not been

extinguished, and they are not the owners of the subject property. We find

both of the appellants’ assignments of error to lack merit. The trial court did

not err in denying appellants’ motion for partial summary judgment,

granting Wells Fargo’s motion for summary judgment, and dismissing

appellants’ action with prejudice.

CONCLUSION

For the foregoing reasons, the judgment of the trial court is affirmed.

Costs of appeal are assessed to the Culbertsons.

AFFIRMED.

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