In PNC Mortgage v. Howard, No. 21-0941, 2023 WL 3398580 (Tex. May 12, 2023), the Supreme Court of Texas held that PNC’s foreclosure action was time-barred and in the “mortgage-lending context, what subrogation gives a refinance lender is merely a back-up lien.”  In 2003, the Howards took out two mortgages with First Financial Corporation.  In 2005, they refinanced with a bank, which assigned its note and deed of trust to PNC.  The Howards stopped paying in 2008 and PNC accelerated the note in 2009.  In 2015, PNC started foreclosure proceedings due to Howard’s failure to pay the PNC note. The Court explained that since the four-year statute of limitations had expired on PNC’s lien, PNC relied on the doctrine of equitable subrogation and asserted a claim for foreclosure on the lien held by the original lender.  Relying on an analysis of balancing “the equities, including PNC’s alleged negligence in allowing the statute of limitations to expire,” the Court of Appeals held the trial court did not err by denying equitable relief and rendering judgment for the borrowers.

PNC petitioned the Texas Supreme Court to review the case. While waiting for the review, the Texas Supreme Court ruled in Federal Home Loan Mortgage Corp. v. Zepeda, 601 S.W.3d 766-67, and held that in the mortgage-lending context, a refinance lender’s negligence in preserving its own lien plays no part in its entitlement to enforce an earlier lien through equitable subrogation.  Because the Court of Appeals’ equity-balancing analysis in the first appeal of this case conflicted with Zepeda, the Texas Supreme Court reversed the Court of Appeals judgment and remanded the court to address the Howard’s claim that PNC’s equitable subrogation claim is time-barred.

On remand, the Court of Appeals concluded that any equitable subrogation claim that PNC could have asserted would have accrued when PNC accelerated the Howards’ note and this claim was time-barred too.  PNC appealed to the Texas Supreme Court arguing the statute of limitations on a refinance lender’s subrogation claim should not begin to run until the maturity date of the notes on the original debts that were later refinanced.  The Court ultimately held that any claim PNC would have had through subrogation to foreclose on the original creditor’s lien would have accrued at the same time that PNC’s own claim accrued, which was when PNC accelerated the borrowers’ refinanced loans.  Since PNC failed to initiate foreclosure within four years of that date, the Court ruled PNC’s claim was barred.  This is a good lesson for all owners and holders of notes that once a party accelerates a note, the statutes of limitations could begin to run.

No information in this communication is intended to constitute specific legal advice.  For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at



William “Pat” Huttenbach | Shareholder | Banking Litigation
Crain Caton & James | Attorneys & Counselors
Five Houston Center | 1401 McKinney St., Suite 1700
Houston, TX 77010
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PNC Mortgage v. Howard