Texas: The $4 Million Dollar Wrongful Foreclosure Judgment Against Deutsche Bank and PHH Ocwen

APPEAL ABATED PENDING ‘SETTLEMENT DISCUSSIONS’

CONFIRMED: HOMEOWNERS WIN MILLIONS IN DAMAGES AND A “FREE HOME” FROM ONITY/DBNTCO

THE GREATEST THEFT OF CITIZENS HOMES IN HISTORY
Another wrongful foreclosure decision in Texas federal courts, where judgment based on a “guess”, and which favored @WellsFargo in this case. Their lawyers @lockelord were awarded $26k in attorney fees.https://t.co/G3jThXCLaY pic.twitter.com/1OUZ5WK1c4

— lawsinusa (@lawsinusa) April 4, 2024

13-22-00425-cv – 13TH COURT OF APPEALS, CORPUS CHRISTI

Ocwen Loan Servicing, LLC, Homeward Residential, Inc. (f/k/a American Home Mortgage Servicing, Inc.), Deutsch [sic] Bank National Trust Company, trustee for Ameriquest Mortgage Securities, et al. vs. Consuelo Jones, Gabriella Jones

SEP 20, 2023 | REPUBLISHED BY LIT: NOV 5, 2023

BRIEF OF APPELLANTS

STRAW MAN DEUTSCHE BANK AND OCWEN FINANCIAL REBRANDED TO PHH MORTGAGE CORPORATION

PREPARED BY KNOWN FORECLOSURE MILL DYKEMA GOSSETT PLLC

SEP 13, 2023 | REPUBLISHED BY LIT: NOV 5, 2023

TO THE HONORABLE JUSTICES OF THE COURT:

Houses aren’t free, and neither is money. These are two of the few certainties in life.

Yet the Joneses received both—and then some—in the trial court.

Despite the Joneses defaulting for many years on a home equity loan they used to pay off their mortgage, the trial court ultimately rescinded a lawful foreclosure on the home, transferred title of the home back to the Joneses free and clear of any loan obligations, and refused the home equity lender’s request for subrogation of the mortgage loan paid off with the proceeds of the home equity loan.

On top of that, the trial court also awarded money damages to the Joneses, essentially forcing Appellants to pay the Joneses to take title to a house for which the Joneses had admittedly failed to pay.

This was, by any measure, a remarkable outcome in the trial court.

In the final measure, Appellants have paid for this property ten- times over, while the Joneses, who continue to live at the property, have not made a payment on the home since 2009.

Yet under the trial court’s judgment it is the Joneses who now live in the house free-and-clear of any loan obligations, while also being entitled to substantial damages from Appellants.

This world-turned-upside down result is inequitable, unjust, and improper under Texas law.

The trial court’s judgment should be reversed.

STATEMENT OF FACTS

Creation of the lien. In 2004, Appellee Gabriela Joneses, along with her father, non-party Edwin Jones, obtained a home equity loan from Ameriquest Mortgage Company, Trustee’s predecessor-in-interest, secured by a lien on their homestead under Article XVI, Sec. 50 of the Texas Constitution. CR 113.

Gabriela’s motion and Edwin’s then-wife, Appellee Consuelo Jones, did not sign the note but signed the lien security instrument as required by the Constitution. Id.; CR 118.

In the documents they signed to obtain the loan, the Joneses represented that their home was worth $148,000. 11RR 12.

They also warranted that all constitutional requirements for the attachment of a lien to a homestead had been complied with. CR 566.

The loan closing documents showed that the Joneses used the proceeds of the home equity loan to pay off their existing Bank of America mortgage debt on the property for $75,817.72, pay off various other debts for $23,792.32, and retained $10,889.96 in cash. 11RR 15.

With its mortgage loan satisfied via the home equity loan proceeds, Bank of America duly released its lien on the property. 11RR 64.

Ameriquest assigned the note and lien to Appellant Deutsche Bank National Trust, As Trustee for Ameriquest Mortgage Securities Inc., Asset-Backed Pass-Through Certificates, Series 2004-R8 (“Trustee”) in 2009. 11RR 55.

Appellant Homeward Residential, Inc (f/k/a American Home Mortgage Servicing, Inc.) became the servicer of the mortgage. CR 1102.

The Joneses default, and Homeward forecloses.

The last payment the Joneses made on their home equity loan was in April 2009. 11RR 111. As a result, the home equity loan went into default, and Appellant Homeward, under its former name American Home Mortgage Servicing, Inc. (“AHMSI”), initiated foreclosure proceedings. 11RR 60.

Homeward applied for an order for foreclosure several times, each time putting off foreclosure to negotiate with the Joneses in an effort to modify the loan with terms more favorable to the Joneses. 11RR 430-505 (extensive loan modification correspondence). These loan modification efforts were not successful. 11RR 505.

Homeward thus moved forward with foreclosure. 11RR 208.

After the Joneses failed to respond to the application for foreclosure, Homeward filed a motion for default judgment. CR 722.

On that same day, Consuelo Jones filed a response to the application for foreclosure. CR 400.

With a response on file, Homeward notified the court it was no longer entitled to a no-answer default and set the application for foreclosure for hearing. CR 461, 465.

As required by law, Homeward mailed notice of the hearing to the Joneses. 11RR 205. The notice, sent by certified mail to the Joneses’ property address on file, went unclaimed. 11RR 207.

The hearing proceeded on November 30, 2011. 11RR 209. None of the Joneses appeared at the hearing. 6RR 37:12-16. The trial court entered an Order for Foreclosure. 11RR 208.

Homeward mailed the Order of Foreclosure and Notice of Trustee’s Sale of the property to the Joneses. 11RR 233-60 (notice with Order of Foreclosure, Notice of Trustee’s Sale, and certified mail receipts). Again, the notices went unclaimed. Id. (notices to Edwin and Consuelo returned unclaimed).

The foreclosure sale proceeded on February 5, 2013, and the property sold to Trustee for $84,310.00. 11RR 263. 

At the time of the sale, the Joneses had not made a payment on the loan in nearly four years, meaning that foreclosure could not have come as a surprise.

The prior eviction decision from this Court.

After title duly transferred to Trustee, Trustee pursued eviction of the Joneses from the property via a forcible detainer action in Justice of the Peace court. 10RR 136. After Trustee won eviction, the Joneses appealed. 10RR 132.

The eviction proceeding eventually came before this Court. Deutsche Bank Nat’l Tr. Co. v. Jones, No. 13-14-00464-CV, 2015 Tex. App. LEXIS 6765 (Tex. App.—Corpus Christi July 2, 2015, no pet.).

This Court determined that Trustee had not met its evidentiary burden to prove its right of possession at that time, because it failed to present evidence proving it had given notice to vacate and that the Joneses had failed to vacate.1 Id. at *14. Because of that technicality, the trial record did not permit holding for Trustee on its forcible detainer action. Id. at *16. Even so, this Court made clear that “a judgment of possession in a forcible detainer action is a determination only of the right to immediate possession and does not determine the ultimate rights of the parties to

1 Though not presented at trial, the evidence was included in the appellate record.

any other issue in controversy relating to the realty in question.” Id. at *10 (citation omitted).

MARCC buys the property; Appellants no longer have an interest.

Following the Courts’ opinion, Appellee MARCC Real Estate Investment LLC (“MARCC”) purchased the property from Trustee in an online sale for $95,394.00. 11RR 360.

Following Appellant Ocwen Loan Servicing, LLC’s (“Ocwen”) acquisition of Homeward, Ocwen became servicer of the loan and conducted the sale as attorney-in-fact for Trustee. 11RR 391. In the purchase agreement, MARCC agreed that the purchase was “as-is” and acknowledged Trustee’s disclaimer regarding occupancy of the property and eviction proceedings. 11RR 370 at ¶ 11.1, 372 at ¶13.2. MARCC then sought to evict the Joneses.

MARCC won eviction in the Justice of the Peace Court, and the Joneses appealed to the County Court at Law. CR 692. That matter was set for trial in 2017. CR 695. Prior to the trial, the parties agreed to cancel the trial. Id. The eviction appeal remains pending to this day. Id. Over a decade after the foreclosure, fourteen years after they last made a payment on their home equity loan, and with MARCC now making insurance and property tax payments, the Joneses have never been evicted from the property. 5RR 255:4-18.

The Joneses sue Appellants over the lien and foreclosure proceedings. The Joneses filed this case in 2017 by suing Homeward, Trustee, Ocwen, and MARCC, claiming title to the property, wrongful foreclosure, wrongful eviction, intentional infliction of emotional distress, and abuse of process. CR 37. The Joneses further sought declaratory judgment that the home equity lien was void. Id. MARCC filed cross- claims against Trustee for fraud and breach of warranty of title, and Appellants filed a conditional counterclaim seeking declaratory judgment that, should their lien be invalidated, Appellants were equitably entitled to subrogate the Bank of America mortgage that had been fully paid off with home equity loan funds. CR 67, 652.

After discovery, Appellants filed a motion for no-evidence and traditional summary judgment on all claims asserted against them. CR 84. The motion was summarily denied. CR 483.

The Joneses and MARCC then filed their own motions for summary judgment.  The Joneses sought partial summary judgment on liability on all of their claims, and MARCC sought partial summary judgment on

its breach of warranty of title claim only. CR 495 (MARCC’s motion for summary judgment); CR 522 (Joneses’ motion for summary judgment). The trial court granted both motions for summary judgment, finding liability against the Appellants on all of the Joneses claims and on MARCC’s claim for breach of warranty of title. CR 1373, 1374. After the motions for summary judgment were adjudicated, all that remained were the issues of the Joneses’ damages, MARCC’s fraud claim and damages, and Appellants’ equitable subrogation claim. These limited remaining issues were set for a bench trial in November 2019.

At trial and with no prior notice, the Joneses requested that the order granting summary judgment to them on liability be “rescinded or carried so that [the Joneses] [could] fully present [their] case to Your Honor and build the record that [they] need to build in order to sustain a judgment.” 4RR 43:20-25. In other words, the Joneses asked that the trial court’s grant of summary judgment to them finding Appellants liable on all of the Joneses’ claims be vacated, thereby radically changing the issues at trial and re-introducing the previously resolved issue of liability. Appellants took issue with this unusual and untimely request, pointing out that Appellants had only prepared for a bench trial on damages, and would have prepared differently—and perhaps stood on their jury demand—if they had notice that the Joneses’ liability issues would be relitigated. 4RR 44:1-47:8.

The trial court did not rule on the request to set aside the summary judgment order during the bench trial but time and again admitted evidence that went to liability over Appellants’ repeated objections. E.g., 4RR 47:9-10. The court’s Amended Final Judgment states: “At the outset of the trial, The Joneses requested that the Court rescind the summary judgment granted on April 11, 2019, and the Court granted the request and provided all parties the opportunity to litigate all claims raised.” 2Supp.CR 84. But because this “decision” was not announced on the record at any time, not all liability issues were, in fact, tried during the bench trial. Instead, Appellants maintained their position that the liability issues had been adjudicated via summary judgment, even as the other parties put on evidence of liability. Appellants were thus never afforded an opportunity to meaningfully contest the liability issues after the trial court sub silencio “rescinded” its order granting summary judgment to the Joneses on all liability issues.

Even so, the evidence put on at trial failed to support invalidation of the lien. Notably, the Joneses put on no evidence that they ever notified Trustee of any defect in the lien to trigger Trustee’s constitutional right to cure, which is an absolute requirement for invalidating the lien.

The evidence on summary judgment and at trial also confirmed that there was no defect in the foreclosure sale, because Homeward gave every required notice of the default and sale to the Joneses. 11RR 205-07 (hearing notice with USPS tracking), 11RR 233-60 (notice with Order of Foreclosure, Notice of Trustee’s Sale, and certified mail receipts). Testimony from the attorney that handled the sale confirmed that the few clerical errors in the court documents leading up to the sale were not fatal to the foreclosure under Texas law and were immaterial to the sale itself. See 6RR 19:20-53:6.

While the Joneses attempted to establish the foreclosure sale price of the home was grossly deficient compared to its actual value (one of the elements of wrongful foreclosure), their evidence of value came only from unreliable and non-contemporary sources (such as from Zillow.com as of 2019, some 6 years after the foreclosure sale occurred), and the best evidence of the value of the home in 2013 still placed it within the appropriate sale price range as a matter of law. 5RR 23:1-33:23.

Consuelo and Gabriela Jones both testified without presenting evidence establishing the material disruption to everyday life required to recover mental anguish damages. Moreover, neither of them explained why they thought they were entitled to continue to reside in a house in 2013 on which they hadn’t made a payment since 2009. Neither the Joneses nor MARCC presented any evidence at trial demonstrating malice on the part of any of the Appellants at any time.

Following the bench trial, the trial court entered an Amended Final Judgment on all claims. 2Supp.CR 84. In the Amended Final Judgment, the trial court stated for the first that that it had rescinded its grant of summary judgment to allow for trial of liability at the bench trial, but nothing in the trial record indicates this. 2Supp.CR 84. The Amended Final Judgment quieted title in the property to the Joneses and awarded Consuelo Jones $350,000 in mental anguish damages and $1.25 million in exemplary damages. Id. Gabriela Jones was awarded $250,000 in mental anguish damages, and $1.25 million in exemplary damages. Id. The Joneses were additionally awarded $400,000.00 in attorney’s fees, $11,258.00 in costs, and $151,154.11 (Consuelo) and $112,243.20 (Gabriela)  in  prejudgment  interest.   Id.   MARCC  was  awarded $196,961.00 in compensatory damages, $250,000.00 in exemplary damages, $66,345.00 in attorney’s fees, $68,960.88 in prejudgment interest, and costs..

The trial court entered extensive findings of fact and conclusions of law, virtually verbatim as proposed by the Joneses and MARCC. 4Supp.CR 97, 131. Appellants filed this appeal.

SUMMARY OF THE ARGUMENT

The trial court’s Amended Final Judgment is the product of multiple, independent errors, and any one of these errors in independently sufficient to require reversal.

First, both the pleadings and evidence submitted by the Joneses contain a fatal omission. Because the Joneses failed to plead much less prove that a defect exists in the lien and also failed to plead or prove that they notified Appellants of any defect in the lien, the trial court erred by voiding the lien created by the Joneses’ home equity loan.

Second, the trial court’s sub silencio and off-the-record recission of its summary order finding for the Joneses on the issues of liability on each of their claims improperly and untimely re-injected the issue of liability into the trial without notice to Appellants. Appellants were put in the untenable position of not knowing that liability was a live issue at the bench trial, and Appellants were thus denied the ability to fully and fairly contest the issue of liability for the Joneses claims at trial. The trial court’s last-minute and off-the-record conversion of a bench trial on damages into a full-scale trial on liability deprived Appellants of due process.

Third, whether evaluated at the summary judgment stage or based on the evidence presented at trial, the trial court also erred by granting judgment to the Joneses on their liability claims and to MARCC on its breach of warranty of title claim, while also denying Appellants’ motion for summary judgment.

Fourth, the evidence admitted at the bench trial was neither legally nor factually sufficient to support the trial court’s finding of liability on all of Appellees’ claims.

Fifth, it is undisputed that the Joneses used the proceeds of their home equity loan to pay off the mortgage on their home. As such, the trial court further erred by denying Appellants’ claim for a declaratory

judgment that they were subrogated to the Bank of America mortgage loan paid off by the Joneses’ home equity loan proceeds.

Sixth and finally, to the extent this Court does not find any of the foregoing five liability-related errors took place, the trial court also erred by awarding damages to Appellees to which they were not entitled under Texas law.

STANDARD OF REVIEW

Summary Judgment

Appellants contend that the trial court erred in granting Appellees’ motion for summary judgment and in denying their own. A summary judgment decision is a question of law reviewed de novo. Doss v. Homecomings Fin. Network, Inc., 210 S.W.3d 706, 710 (Tex. App.— Corpus Christi 2006, pet. denied).

Evidentiary Sufficiency

Appellants contend the Amended Final Judgment is not supported by legally or factually sufficient evidence. “In evaluating the legal sufficiency of the evidence to support a finding, [the Court] must determine whether the evidence as a whole would enable reasonable and fair-minded people to differ in their conclusions.”  Falcon Int’l Bank v. Cantu, No. 13-13-00577-CV, 2015 Tex. App. LEXIS 3737, at *6 (Tex. App.—Corpus Christi Apr. 16, 2015, no pet.).

In reviewing factual sufficiency of the evidence, courts of appeals must review all of the evidence in a neutral light and set aside a finding “if it is so contrary to the overwhelming weight of the evidence that [it] is clearly wrong and unjust.” Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998).

Conclusions of Law

Courts “review a trial court’s conclusions of law de novo.” Falcon Int’l Bank, 2015 Tex. App. LEXIS 3737, at *6-7 (citations omitted).

ARGUMENT

Having stopped paying their home equity loan in 2009, the Joneses took two separate avenues in their attempt to avoid the consequences of their default: (1) argue that Appellants’ lien was invalid from the start; and (2) argue that the eventual foreclosure sale was reversibly flawed. At summary judgment, they sought declaratory relief as to the foreclosure sale only; the same relief was reiterated in the Amended Final Judgment. CR 529; 2Supp.CR 84. In its Amended Final Judgment, the trial  court  additionally  voided  Appellants’  lien  on  the  property. 2Supp.CR 84. Because the trial court did not void the lien until after the bench trial, this issue exists separately from the due process issues implicated by off-the-record rescission of summary judgment.

I.            The Appellants’ lien was valid.

The Joneses did not meet their burden to demonstrate the invalidity of the lien. See Wilson v. Aames Capital Corp., No. 14-06- 00524-CV, 2007 Tex. App. LEXIS 8345, at *2 (Tex. App.—Houston [14th Dist.] Oct. 23, 2007, no pet.) (plaintiff’s must demonstrate that lender failed to comply with constitutional requirements).

The Texas Constitution contains a laundry-list of exacting requirements for obtaining a lien against a homestead as security for a home equity loan. See TEX. CONST. ART. XVI, §50 (a)(6). It also provides lenders a chance to cure any failure to comply in order to preserve the lien. Tex. Const. Art. XVI, § 50(a)(6)(Q). Critically, the cure provision requires the borrower to give notice to the lender of the defect. Id.

Thus, “[b]ased on the home equity loan provisions, to be entitled to a declaration that their home equity loan is invalid and entitled to [relief] as a matter of law,” a plaintiff must “conclusively establish the loan failed to comply with the constitutional requirements, they noticed the Bank, and the Bank failed to timely cure upon being noticed.” Curry v. Bank of Am., N.A., 232 S.W.3d 345, 352-53 (Tex. App.—Dallas 2007, pet. denied) (citing See Tex. Const. art. XVI, § 50(a)(6)(Q)(x)).2

One of the constitutional requirements is that a line of credit secured by a lien on a homestead is to “close not before . . . the 12th day after the later of the date that the owner of the homestead submits a loan application to the lender for the extension of credit or the date that the lender provides the owner a copy of the notice prescribed by Subsection (g) of this section.” TEX. CONST. ART. XVI, § 50(a)(6)(M)(i). The alleged failure to meet this requirement is the only constitutional basis3 on which the Joneses challenge the lien. CR 486.

First, the Joneses put on no evidence—and indeed, wholly failed to argue—that they ever notified Appellants of the alleged defect in the lien.

2 In its findings of fact and conclusions of law, the trial court concluded that “Plaintiffs were not required to prove they tendered the borrowed funds or provided notice and an opportunity to cure under the Texas Constitution.” 4Supp.CR 120, ¶ 14. This conclusion is erroneous as a matter of law; the burden was on the Joneses to prove notice. See Curry, 232 S.W.3d at 352.

3 In addition to addressing the twelve-day waiting period issue, the trial court also found that Appellants “admitted that they did not possess a copy of the notice of rights under the Texas Constitution that was required to be provided to the borrowers under Texas Constitution article XVI, § 50(g).” 4Supp.CR 102, ¶ 22. It concluded “[t]he Court finds such notice was not provided.” Id. The alleged § 50(g) shortcoming was not pleaded by the Joneses. See CR 484 (Plaintiffs’ Second Amended Original Petition). The Joneses also failed to prove they gave notice to Appellants so that they could cure this unpleaded issue, precluding relief. See Mapco, Inc. v. Carter, 817 S.W.2d 686, 688 (Tex. 1991) (judgment must conform to the pleadings).

See Tex. Const. art. XVI, § 50(a)(6)(Q)(x). Appellants were thus never afforded their right to cure the alleged error. See id. And while the alleged failure of a temporal requirement of the closing process, as alleged here, may seem to elude a retrospective cure, the Texas Supreme Court has declared that the cure provision applies to every constitutional requirement for securing a lien on a homestead. Doody v. Ameriquest Mortg. Co., 49 S.W.3d 342, 347 (Tex. 2001) (holding “that section 50(a)(6)(Q)(x)’s cure provision applies to all the lender’s obligations under the extension of credit”) (emphasis added).

The cure clause has a catch-all provisions “for the cure of [] defects where the cure itself will not fully fulfill the purpose of the requirement.” Summers v. Ameriquest Mortg. Co., No. 14-06-00734-CV, 2008 Tex. App. LEXIS 254, at *13-14 (Tex. App.—Houston [14th Dist.] Jan. 15, 2008, no pet.) (quoting Adams v. Ameriquest Mortg. Co., 307 B.R. 549, 558 (Bankr. N.D. Tex. 2004)); see Tex. Const. Art. XVI, § 50(a)(6)(Q)(x)(f) (catch-all cure provision). This provision allows for the cure of the temporal requirements, including the twelve-day waiting period. See Adams, 307 B.R. at 558.

Nothing in the record establishes that the Appellants were ever notified by the Joneses (or any other source) of an unsatisfied constitutional requirement, or afforded the opportunity to cure. The Joneses’ failure to argue and prove notice precludes the trial court’s declaration that the lien is void. See Curry, 232 S.W.3d at 352-53.

Second, far from giving notice of an alleged constitutional defect, the evidence shows that on the contrary the Joneses warranted that twelve days had elapsed between their loan application and the date the loan closed: CR 566.

This sworn warranty conclusively negates The Joneses’ argument that the constitutional requirements were not met.4 Indeed, the trial testimony established that the affidavit was intended to induce the reliance of Appellants, 6RR 138:25-139:16, and the Joneses should consequently be estopped from arguing a failure of the constitutional

4 The trial court found that the Joneses conclusively proved that the loan application was signed the same day as the loan closed. 4Supp.CR 116, ¶ 5. Appellants challenge this finding as directly contradictory to the evidence.

twelve-day waiting period requirement. See Storms v. Tuck, 579 S.W.2d 447, 452 (Tex. 1979) (explaining estoppel).

While a copy of the loan application was signed at closing, and therefore bears the same date as the closing documents, testimony at the bench trial established that a copy of the loan application is often included in the closing documents for signature. 6RR 140:16-19. Testimony also demonstrated that it would be impossible to process a loan application in one day, undercutting the Joneses’ argument that the loan was applied for and closed on the same day. 6RR 139:20-140:9. Further, loan signatory Gabriela Jones testified that she did not know when the application had been submitted. 5RR 55:8-22.

Failure to notify Appellants of the alleged defect aside, the Joneses did not carry their burden to prove a violation of the twelve-day waiting period requirement. See Puig v. Citibank, N.A., 514 F. App’x 483, 487 (5th Cir. 2013) (burden not met where plaintiff did not know when the twelve-day period was triggered). The lien cannot be voided on the evidence presented by the Joneses in this case, and the trial court erred in doing so.

II.         The trial court denied Appellants due process by off-the- record rescinding its grant of summary judgment to the Joneses on liability during trial, thereby materially changing the issues at trial with no notice to Appellants.

In its Findings of Fact and Conclusions of Law on Plaintiffs’ Claims Against Bank Defendants, the trial court states that it had “impliedly granted” the Joneses’ request to rescind the grant of summary judgment on liability in their favor. 4Supp.CR 98. While failing to note where in the record this recission occurred, the findings further state that the trial court’s intent to rescind the summary judgment was evidenced by the fact that “all parties presented evidence on all questions of liability and damages.” Id.

But these findings are in conflict with the record; the trial court’s “intent” to rescind the summary judgment was never stated and the trial court failed to make a ruling on the Joneses’ deeply odd request to rescind the grant of summary judgment in their favor. As a result, the Appellants did not know that the liability resolved by summary judgment were suddenly “live” for trial, and Appellants were unable to present a full case on liability. Stated another way, Appellants came to court prepared to try damages—not liability, which had been resolved—on the Joneses’ claims against them. The trial court’s unstated, off-the-record decision at some undefined point during trial to rescind the summary judgment for the Joneses and conduct a bench trial on liability without notice to the Defendants-Appellants denied them their fundamental due process rights.

“Notice is ‘[a]n elementary and fundamental requirement of due process.’” B. Gregg Price, P.C. v. Series 1 – Virage Master LP, 661 S.W.3d 419, 422 (Tex. 2023) (citation omitted). “The United States Constitution’s Due Process Clause and the Texas Constitution’s Due Course of Law Clause require adequate procedural due process for parties to a judgment, including notice of trial court proceedings.” Id. (citation omitted). “Such notice must be ‘reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.’” Id. at 423 (quoting Mullane, 339 U.S. at 314). “That opportunity ‘must be granted at a meaningful time and in a meaningful manner.’” Id. (citation omitted).

Critically, “issues determined by a summary judgment are final even though the judgment is interlocutory, and a party may not continue to litigate the issues so determined unless the judgment is set aside by the trial court or reversed on appeal.” A.J. Morris, M.D., P.A. v. De Lage Landen Fin. Servs., No. 2-06-430-CV, 2009 Tex. App. LEXIS 457, at *7 (Tex. App.—Fort Worth Jan. 22, 2009, no pet.) (citing Elder Constr., Inc. v. City of Colleyville, 839 S.W.2d 91, 92 (Tex. 1992)).

Due process is implicated if a trial court revives issues at trial that were previously determined on summary judgment. Elder Constr., Inc., 839 S.W.2d at 92 (it is “not proper, however, for the trial court to deny the parties a trial on the issues thereby reinjected into the case” when the court rescinded its summary judgment during trial).

“If a trial court decides some of the contested issues prior to trial in a partial summary judgment, the trial court may later revisit those issues while it retains plenary power over the judgment as long as the parties are given a fair opportunity to present evidence on the issues.” Id. at *7-8 (emphasis added). A trial court may not “determine prior to trial that certain issues were established as a matter of law, conduct the trial on that basis, and then withdraw its ruling without affording the parties a fair opportunity to present . . . their positions on issues no longer taken to be established.” Id. at 92 (reversing trial court judgment after court submitted liability questions that it had previous

decided on summary judgment to the jury); see also Robles v. Consol. Graphics, 965 S.W.2d 552, 558 n.5 (Tex. App.—Houston [14th Dist.] 1997, pet. denied) (issue decided in first summary judgment was not before the court in second).

Here, Appellants were blindsided at the bench trial on damages by the Joneses’ request that the court rescind the order awarding them summary judgment on their liability claims. See CR 1373 (order granting summary judgment for the Joneses); 4RR 44:1-47:8 (discussion at trial of Appellants’ surprise at the Joneses’ wish to re-litigate liability). Knowing that summary judgment had been granted for the Joneses on liability for their claims, Appellants were prepared only to try damages, MARCC’s cross-claim for fraud, and Appellants’ counter-claim for equitable subrogation. See id. Appellants had no notice that the Joneses intended to request rescission of the summary judgment order in their favor, nor that the trial court was willing to continue to hear evidence on issues previously resolved.

Even more improper, the trial court never expressly ruled on the Joneses’ request to rescind the summary judgment ruling in their favor and to retry liability. See generally id.; 4Supp.CR 98, Findings of Fact and Conclusions of Law (stating the trial court “impliedly granted the request”, and establishing that the request was not expressly granted at the time). Appellants were thus forced to take a case through trial without notice that liability for the Joneses’ claims was a live issue. This “trail by ambush” represents a material deprivation of due process for Appellants, who were denied the ability to litigate the liability issues that the trial court sub silencio revived at some unknown point in the bench trial.

The trial court’s apparent “decision” (not articulated anywhere on the record until the Amended Final Judgment was signed) to rescind the summary judgment order should be set aside, and the Joneses’ victory on liability be evaluated on the summary judgment record alone.

III.      On the summary judgment record, the trial court erred in granting the Joneses’ and MARCC’s motions for partial summary judgment, and should have instead granted Appellants’ motion for summary judgment on all claims.

All parties filed motions for summary judgment—the Joneses sought and received partial traditional summary judgment on liability for all of their claims, MARCC sought and received summary judgment on liability for its breach of warranty of title claim, and Appellants moved for but were denied traditional and no-evidence summary judgment against all of the Joneses’ claims.5 CR 84, 522; CR 483, 1373, 1374.

“A defendant who conclusively negates a single essential element of a cause of action or conclusively establishes an affirmative defense is entitled to summary judgment on that claim.” Altecor v. United Prop. & Cas. Ins., No. 13-20-00148-CV, 2022 Tex. App. LEXIS 1268, at *19 (Tex. App.—Corpus Christi Feb. 24, 2022, pet. denied). As for no-evidence summary judgment, the trial court must grant a no-evidence motion unless the non-movant brings forth more than a scintilla of probative evidence to raise a genuine issue of material fact on the challenged element. Smith v. O’Donnell, 288 S.W.3d 417, 424 (Tex. 2009).

A.        The Joneses’ wrongful foreclosure claim fails as a matter of law.

The Joneses’ wrongful foreclosure claim is not supported by the summary judgment record. “To prevail in a wrongful foreclosure suit, a party must establish (1) a defect in the foreclosure sale proceedings, (2) a grossly inadequate selling price, and (3) a causal connection between the defect and the grossly inadequate selling price.”  Sauceda v. GMAC

5 Appellants did not move on MARCC’s claims for fraud or breach of warranty of title.

Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.—Corpus Christi 2008, no pet.).

1.           There   was   no   fatal   defect   in   the  foreclosure proceedings.

A defect in foreclosure proceedings occurs when there is no default on the loanor statutory foreclosure procedures are not followed. Senger Creek Dev., LLC v. Fuqua, No. 01-15-01098-CV, 2017 Tex. App. LEXIS 5076, at *22 (Tex. App.—Houston [1st Dist.] June 1, 2017, no pet.).

But “not all defects in the foreclosure process create a chilling effect on prospective buyers,” and thus cannot serve as the basis of a successful wrongful foreclosure claim. Pineda Reo, LLC v. Lomix Ltd. P’ship, No. 13- 17-00277-CV, 2019 Tex. App. LEXIS 9723, at *20 (Tex. App.—Corpus

Christi Nov. 7, 2019, pet. denied), First State Bank v. Keilman, 851 S.W.2d 914, 923 (Tex. App.—Austin 1993, writ denied) (collecting cases)); see also Resolution Tr. Corp. v. Summers & Miller Gleneagles Joint Venture, 791 F.Supp. 653, 655 (N.D. Tex. 1992) (incorrect property description in notice of foreclosure sale did not chill the sale).

“The defects that ordinarily impair a foreclosure are those in which notice is not given as required by statute or the deed, or when the party controlling the process chills the bidding.” Pineda Reo, LLC, 2019 Tex. App. LEXIS 9723, at *20-21. Here, the Joneses alleged the following “defects”:

·        The Order for Foreclosure stated that none of the Joneses had responded to the foreclosure proceeding initiated by Homeward, when Consuelo had in fact answered;

·        Appellants did not submit a proper certificate of last known address after obtaining a foreclosure order after a contested hearing;

·        The Order for Foreclosure did not comply with requirements that were not in effect at the time of the foreclosure proceeding;

·        The Joneses did not receive notice of the foreclosure;

·        The Notice of Trustee’s Sale recited that the application for foreclosure had been approved in March 2011, rather than November 2011;

·        Homeward conducted the sale under its new name (Homeward) rather than its name at the time it filed its application for foreclosure (American Home Mortgage Servicing, Inc.);

·        The foreclosure sale was conducted by a different substitute trustee than the one that had signed the Notice of Trustee’s Sale.

CR 525-29. To the extent that these allegations are accurate (many are not, as the summary judgment evidence bore out), none rise to the level of “defect” sufficient to support a wrongful foreclosure claim. See Pineda Reo, 2019 Tex. App. LEXIS 9723, at *20.

The summary judgment record shows that each alleged “defect” raised by the Joneses was innocent on Appellants’ part, contextually harmless, and not sufficient to support a wrongful foreclosure claim:

·        The misstatement in the Order for Foreclosure. Consuelo responded to the foreclosure proceedings on the same day that Appellants filed their motion for default, with which they filed a proposed order accurately stating—to their knowledge at the time—that no one had answered. CR 571, 576, 582. After receiving notice of Consuelo’s response, Appellants set the foreclosure application for a hearing, CR 734,6 at which the Joneses failed to appear. The court signed the original order submitted with the default motion, though they did not technically receive a no-answer default. CR 591. Although the order recited that none of the Joneses responded to the application for foreclosure, the Joneses have failed to identify any legal authority that this is a fatal “defect” in the proceeding, or how such a recitation is consequential to the foreclosure as a whole, when a hearing on the application was noticed and with a failure to appear.

·        The certificate of last known address. Appellants submitted an accurate certificate of last known address when they submitted their Motion for Default Order. CR 1065. The Joneses failed to offer legal authority or argument as to why that certificate was insufficient, especially when Consuelo provided her own address to the court when she responded to the foreclosure application.

·        Requirements of the Order of Foreclosure. The provisions of the Texas Rules of Civil Procedure with which the Joneses argued the foreclosure order did not comply were not made

6 And even so, the Joneses did not have a meritorious defense to foreclosure. See, infra, Section IV.    Any error in the trial court’s Order on Foreclosure was therefore harmless.

effective until 2012. CR 717, 737. The Order for Foreclosure was entered in November 2011. CR 592.

A.  Notice of the sale.

The unrebutted summary judgment evidence demonstrates that Appellants mailed notice of the foreclosure sale to the Joneses. CR 717, 742-83. And despite the self-serving affidavits of Consuelo and Gabriela that they did not receive notice, CR 594-99, that is not what the law requires—it requires notice to be sent, which is demonstrated by Appellants’ certified mail documentation in the summary judgment record. CR 742-83; TEX. PROP. CODE § 51.0002(e); Deweese v. Ocwen Loan Servicing LLC, 2014 Tex. App. LEXIS 13314, *11 (Tex. App.—Houston [1st Dist.] Dec. 11, 2014, no pet.) (“Whether [borrower] received the notice does not raise a fact issue”); Stanley v. Citifinancial Mtg. Co., 121 S.W.3d 811, 817-18 (Tex. App.—Beaumont 2003, pet. denied). Moreover, it beggars belief that the Joneses could have been unaware that the property was being foreclosed upon when they knew they hadn’t made payments on the home equity loan in years, and when they had actively sought loan modification prior to foreclosure. See CR 975-76. As for the Joneses’ allegation that the court clerk did not mail the Order for Foreclosure to the Joneses in compliance with Texas Rule of Civil Procedure 306, the clerk’s actions are not attributable to Appellants. See Pineda Reo, 2019 Tex. App. LEXIS 9723, at *21.

B.  The date the foreclosure order was entered.

The Joneses cited no legal authority to support their contention that a clerical error in the Notice of Trustee’s sale reciting the incorrect date the Order for Foreclosure was entered is a “fatal” defect, and the Texas Constitution does not recognize any such defect. And as a practical matter, the handwritten date on the Order of Foreclosure could have been read to say “March” rather than “November” on quick glance:

CR 218. Most importantly, the Joneses did not identify why this “defect” would have had a chilling effect on the foreclosure sale.

C.  Homeward’s name change.

American Home Mortgage Servicing, Inc. changed its name to Homeward Residential, Inc. after it submitted the application for foreclosure. CR 271. AHMSI and Homeward are not “different entities,” as the Joneses argued on summary judgment; they are the same entity that went through a name change. The name change is not relevant to the foreclosure proceedings. See Hanson v. Am. Express Nat’l Bank, No. 13-18-00462-CV, 2020 Tex. App. LEXIS 4585, at *4 (Tex. App.—Corpus Christi June 18, 2020, no pet.) ( “a corporate name change has no effect on the identity of the company or its rights…”); Chandler v. United Sav. Ass’n, No. 05-93-00145-CV, 1994 Tex. App. LEXIS 3695, at *11 (Tex. App.—Dallas Mar. 21, 1994, no writ).

D.  The substitute trustee.

Monty Medley was appointed as a substitute trustee of Connie Medley. CR 434. Connie signed the Notice of Trustee’s Sale. CR 437. Monty ultimately conducted the sale. CR 438-39. The Joneses provided no legal authority as to why that was improper, nor how the substitution of trustees ran afoul of the very purpose of appointing substitute trustees for this transaction.

None of these alleged “defects” supports a wrongful foreclosure cause of action or chilled the bidding on the property. See Pineda Reo, 2019 Tex. App. LEXIS 9723, at *20-21. The summary judgment record conclusively negates this element.

1.           There is no summary judgment evidence demonstrating a grossly inadequate sale price caused by any of the alleged “defects.”

As to the second and third elements of a wrongful foreclosure claim, the Joneses did not put any evidence into the summary judgment record that: (1) the sale price of the property was “grossly inadequate;” or (2) that the inadequate sale price was caused by any of the alleged “defects” in the foreclosure sale. See CR 522-618. The trial court erred in granting the Joneses summary judgment on wrongful foreclosure and by denying Appellants’ no-evidence motion against this claim.

The trial court further erred to the extent the wrongful foreclosure claim was also its basis for granting the declaratory relief setting aside the foreclosure sale, voiding title transfer subsequent to the sale, and quieting title in favor of the Joneses.

B.          The trial court erred in finding liability for intentional infliction of emotional distress.

The Joneses claim for intentional infliction of emotional distress (“IIED”) cannot stand on the summary judgment record. This tort has four elements: “(1) the defendant acted intentionally or recklessly; (2) its conduct was extreme and outrageous; (3) its actions caused the plaintiff emotional distress; and (4) the emotional distress was severe.” Hersh v. Tatum, 526 S.W.3d 462, 468 (Tex. 2017). Outrageous conduct is behavior that “goes beyond all possible bounds of decency” and “is regarded as atrocious and utterly intolerable in a civilized community.” Wornick Co. v. Casas, 856 S.W.2d 732, 734 (Tex. 1993) (cleaned up).

The Joneses did not put on any summary judgment evidence to support any one of the elements of an IIED claim. See CR 522-618. Normal foreclosure proceedings, without more, are not extreme or outrageous conduct. See Baskett v. Pleasant, No. 05-95-00271-CV, 1996 Tex. App. LEXIS 1187, at *10 (Tex. App.—Dallas Mar. 27, 1996, writ denied) (“The conduct complained of was nothing more than the normal proceedings incident to a default and subsequent foreclosure.”); Lease Acceptance Corp. v. Hernandez, No. 13-18-00598-CV, 2020 Tex. App. LEXIS 2095, at *14 (Tex. App.—Corpus Christi Mar. 12, 2020, no pet.) (debt collection efforts not extreme or outrageous conduct).

In addition, to support an IIED claim the conduct at issue must be intended to cause severe emotional distress. But the Joneses offered no evidence to support that Appellants foreclosed on the property with the intent of causing emotional distress. See Wieler v. United Sav. Ass’n, 887 S.W.2d 155, 159 (Tex. App.—Texarkana 1994, writ denied) (no evidence that lender intended to cause distress by conducting normal foreclosure proceedings).

There was no basis for the trial court to grant relief for the Joneses on their IIED claim, and it was error to deny Appellants’ no-evidence motion for summary judgment on the IIED claim.

C.          The trial court erred in finding liability for abuse of process.

The Joneses put on no evidence of abuse of process by Appellants; indeed, the Joneses never even made the effort to articulate how they believed Appellants had abused process.

“The gravamen of an action for abuse of process is the misuse of process, whether properly or improperly obtained, for any purpose other than that which it was designed to accomplish.” Martin v. Trevino, 578 S.W.2d 763, 769 (Tex. Civ. App. 1978, writ ref’d n.r.e.). Under Texas law, “[a] claim for abuse of process requires (1) an illegal, improper, or ‘perverted’ use of the process, neither warranted nor authorized by the process, (2) an ulterior motive or purpose in exercising such use, and (3) damages..” Martinez v. English, 267 S.W.3d 521, 528-29 (Tex. App.— Austin 2008, pet. denied).

Beyond their bare abuse-of-process allegation, it is unclear what the Joneses’ argument on this cause of action even is. They alleged no facts to support any element of this cause of action, and certainly did not offer any supportive evidence. The trial court erred in granting relief on this claim.

D.         The trial court erred in finding that Appellants committed fraud on the Joneses.

On their fraud claim, too, the Joneses wholly failed to articulate facts that would constitute fraud, and put on no supporting evidence . “A common-law fraud claim requires ‘a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of its truth, which was intended to be acted upon, which was relied upon, and which caused injury.’” Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 153 (Tex. 2015).

The Joneses do not identify a material misrepresentation made to them by Appellants, nor reliance, nor any injury caused by reliance on the unspecified misrepresentation. And they certainly did not put evidence of any of these elements on the summary judgment record. Again, the trial court erred by granting relief on this cause of action, and should have instead granted Appellants’ no-evidence motion against this claim.

E.          The trial court erred in finding for the Joneses on their wrongful eviction claim.

The Joneses were never evicted from the property, so their wrongful eviction claim should have failed. A successful claim for wrongful eviction requires proving: “(1) the existence of an unexpired contract of renting; (2) occupancy of the premises in question by the tenant; (3) eviction or dispossession by the landlord; (4) damages attributable to such eviction.” McKenzie v. Carte, 385 S.W.2d 520, 528 (Tex. Civ. App.— Corpus Christi 1964, writ ref’d n.r.e.).

The Jones’s own summary judgment evidence shows that they were never evicted, and that Consuelo Jones lived at the property at least until the time the Joneses moved for summary judgment. CR 595. Indeed, throughout their briefing, the Joneses relied heavily on the previous decision of this Court denying Appellants possession. See Deutsche Bank Nat’l Tr. Co. v. Jones, No. 13-14-00464-CV, 2015 Tex. App. LEXIS 6765

(Tex. App.—Corpus Christi July 2, 2015, no pet.). While their reliance on the prior decision is misplaced as it relates to any issues of title (the case adjudicated possession only), it conclusively demonstrates that the Joneses still had possession.. Because this element was conclusively negated by the summary judgment record, the Joneses should not have prevailed, and it was error to deny summary judgment to Appellants.

F.          The trial court erred in finding for the Joneses on their civil conspiracy claim.

Civil conspiracy is a derivative tort requiring proof of five elements:

(1) two or more persons; (2) an objective to be accomplished; (3) a meeting of the minds on the objective; (4) one or more unlawful, overt acts in furtherance of the objective; and (5) damages as a proximate result. Operation Rescue-Nat’l v. Planned Parenthood of Houston & Southeast Tex., Inc., 975 S.W.2d 546, 553 (Tex. 1998). Because none of the Joneses’ tort claims were viable, as established supra, their civil conspiracy claim also fails.

The Joneses further failed to put on any summary judgment evidence the Appellants shared an objective to be accomplished, a meeting of the minds, or damages as a proximate result. See id. The summary judgment record does not support the Joneses’ claim of civil conspiracy.

G.         The court erred in granting summary judgment on the Joneses’ negligence and negligent misrepresentation claims against Ocwen.

The summary judgment record cannot support either the Joneses’ negligence or negligent misrepresentation claims against Ocwen. A “negligence action requires a legal duty owed by one person to another, a breach of that duty, and damages proximately caused by the breach.” Long Island Vill. Owners Ass’n v. Berry, No. 13-14-00363-CV, 2016 Tex. App. LEXIS 2734, at *16 (Tex. App.—Corpus Christi Mar. 17, 2016, pet. denied). The Joneses failed to brief negligence in their motion for summary judgment, failed to allege facts to support a negligence claim, failed to identify any duty owed to them by the Appellants, and failed to put on evidence of any element of negligence.

They failed on these same fronts with regard to their negligent misrepresentation claim against Ocwen. See J. Parra e Hijos, S.A. v. Barroso, 960 S.W.2d 161, 169 (Tex. App.—Corpus Christi 1997, no pet.) (laying out the elements of negligent misrepresentation). Again, there are no factual allegations to support this cause of action, nor did they put on any evidence of any element. It was error to grant summary judgment on this claim, and error to deny summary judgment to Appellants against this claim.

H.         The court erred in granting summary judgment on MARCC’s breach of warranty of title claim.

MARCC filed a partial motion for summary judgment on its breach of warranty claim against Appellants, which the trial court granted. CR 495 (motion), CR 1374 (order).

To establish a breach of the warranty of title, a plaintiff “must show that at the time the land was conveyed, there was a superior title outstanding in another person, and the plaintiff was evicted by the superior title holder.” Garza v. Garza, No. 04-11-00310-CV, 2013 Tex. App. LEXIS 1834, at *12-13 (Tex. App.—San Antonio Feb. 27, 2013, no pet.). “The eviction may be either actual or constructive; however, if the eviction is constructive, the warrantee must prove that paramount title has been positively asserted against him, and that the title asserted is in fact paramount.” Id. (citing Schneider v. Lipscomb Co. Nat’l Farm Loan Ass’n, 146 Tex. 66, 202 S.W.2d 832, 834 (Tex. 1947)). “A warrantee cannot base a constructive eviction on his own voluntary act; if a warrantee cedes to a claim of title that is inferior to his own, the warrantor is not liable.” Id.

MARCC made no effort to show that the Joneses held superior title, and put no such evidence into the record. See CR 495-521 (MARCC’s motion and exhibits). MARCC seems to conflate possession with title; MARCC’s reliance on this Court’s prior opinion in No. 13-14-00464-CV demonstrates that MARCC’s true complaint is one of possession, not title. This Court’s prior opinion, which MARCC submitted as summary judgment evidence, has nothing to do with title to the property. See Jones, 2015 Tex. App. LEXIS 6765, at *7. Instead, that case dealt with possession. Id. This Court expressly stated that “ownership of the property was not at issue.” Id.

Moreover, MARCC has every right to possession of the property and has voluntarily chosen not to proceed with eviction while this lawsuit is pending. The Joneses have not evicted MARCC, and—to the extent that MARCC could argue constructive eviction—any ceding of possession to the Joneses has been entirely voluntary. As the summary judgment record demonstrates, MARCC won possession of the property in June 2016 in the Hidalgo County Justice of the Peace Court. CR 692. The Joneses appealed the award of possession to County Court at Law #6. CR 694. The appeal was set for a bench trial in 2017, which was cancelled by agreement between MARCC and the Joneses after this case was filed. CR 695. The appeal continues to languish on the County Court at Law docket, see Cause No. CL-16-2561-F, and MARCC has stopped advocating possession of the property in favor of pursuing its claims for damages in this case. Appellants cannot be held liable for MARCC’s voluntary cession of the property to the Joneses.

Finally, Appellants disclaimed any responsibility for occupancy of the property when MARCC purchased it, and MARCC acknowledged through its co-owner that it agreed the purchase was “as is” and that MARCC would be responsible for any eviction proceedings. CR 683. Even to the extent MARCC erroneously conflates possession with title with regard to their breach of warranty of title claim, Appellants are not responsible for their possession issues.

The summary judgment record conclusively negates MARCC’s claim for breach of warranty of title, and the trial court erred in granting summary judgment relief to MARCC on this claim. Appellants were instead entitled to summary judgment.

VI.       Even if the trial court’s liability findings are not reversable (they are), the trial court awarded the Joneses and MARCC improper damages.

Because none of their liability claims are supported by the evidence, and therefore must fail as a matter of law, the Joneses and MARCC are not entitled to any damages. See Falcon Int’l Bank v. Cantu, No. 13-13- 00577-CV, 2015 Tex. App. LEXIS 3737, at *35-36 (Tex. App.—Corpus

Christi Apr. 16, 2015, no pet.) (finding no basis for award of exemplary damages, mental anguish damages, or attorney’s fees where no evidence to support liability). But if this Court affirms on liability, the damages awards in the Amended Final Judgment are nonetheless improper and should be reversed or, at the very least, materially reduced.

It is axiomatic that a court may not award a plaintiff more relief than is requested. Great W. Cas. Co. v. Garza, No. 13-04-00611-CV, 2006 Tex. App. LEXIS 7600, at *5 (Tex. App.—Corpus Christi Aug. 28, 2006, no pet.). Yet here the trial court awarded much more relief than was pleaded for, and more than the Joneses and MARCC were entitled to under the law.

A.          The Joneses pleaded for relief under $1 million, but the trial court awarded them $3.1 million in damages.

The   Joneses   pleaded  for   total   relief   between   $200,000  and $1,000,000. CR 484. “Generally, a judgment for damages in excess of the amount pleaded is erroneous, even though a larger award might be warranted by the evidence.” Borden, Inc. v. Guerra, 860 S.W.2d 515, 525 (Tex. App.—Corpus Christi 1993, writ dism’d by agr.) (citing TEX. R. CIV. P. 301). “Thus, a trial court cannot render judgment for an amount in excess of what a plaintiff requested in the live pleadings.” Id.

Yet,   here,  the   trial   court   awarded  the   Joneses,  collectively, $3,100,000 in mental anguish and punitive damage, in addition to free- and-clear title to a house they haven’t made a payment on since 2009. The award more than triples what the Joneses requested, and is erroneous.

B.          The Joneses were not entitled to have the note voided, even if the lien was invalid.

The trial court not only voided the lien on the property, but also voided the note. 2Supp.CR 85. The Joneses thus took title to the property free-and-clear of any obligation to repay the money they indisputably borrowed.

That is not the proper remedy for a constitutionally void homestead lien. When a lien on a homestead is deemed invalid, ‘[t]he remedy available under the Constitution is invalidation of the homestead lien, not the underlying loan.” Paull & Partners Invs., LLC v. Berry, 558 S.W.3d 802, 806 (Tex. App.—Houston [14th Dist.] 2018, no pet.). The Texas Constitution does not create an independent cause of action for forfeiture of the principal and interest. Id.; Kyle v. Strasburger, 522 S.W.3d 461, 466 (Tex. 2017).

To the extent the trial court voided the note on the basis of the Joneses’ wrongful foreclosure claim—rather than based on the alleged constitutional defect in the home equity loan—the “proper remedy for wrongful foreclosure is either: (1) damages equal to the difference between the value of the property at the date of foreclosure and the remaining balance due on the indebtedness; or (2) the setting aside of the foreclosure sale.”  Farkas v. Aurora Loan Servs., L.L.C., No. 05-15-01225-CV, 2017 Tex. App. LEXIS 4912, at *13 (Tex. App.—Dallas May 30, 2017, pet. denied). “When a foreclosure sale is declared void, the debt upon which the foreclosure is based revives and remains outstanding.” Nicholson v. Bank of N.Y. Mellon, No. 02-20-00379-CV, 2022 Tex. App. LEXIS 2167, at *32-33 (Tex. App.—Fort Worth Mar. 31, 2022, no pet.); see also Shearer v. Allied Live Oak Bank, 758 S.W.2d 940, 943 (Tex. App.—Corpus Christi—Edinburg 1988, writ denied) (when foreclosure sale is “set aside, both parties assumed their original positions as debtor and creditor.”).

Under either their claim of constitutional invalidity or wrongful foreclosure, the Joneses do not get to keep both the property and the money they borrowed against it.

C.          The evidence was legally and factually insufficient to support mental anguish damages.

The trial court awarded Consuelo and Gabriela Jones $350,000 and $250,000 in mental anguish damages, respectively. 2Supp.CR 90. These substantial awards are not supported by the evidence.

Mental anguish damages are only available in extreme circumstances, none of which is present in this standard foreclosure action.  Recovery of mental anguish damages requires a showing of a “substantial disruption in the plaintiffs’ daily routine.” Parkway Co. v. Woodruff, 901 S.W.2d 434, 444 (Tex. 1995). The record must demonstrate “evidence of ‘a high degree of mental pain and distress’ that is ‘more than mere worry, anxiety, vexation, embarrassment, or anger’ to support any award of damages.” Id.

Moreover, “without intent or malice on the defendant’s part, serious bodily injury to the plaintiff, or a special relationship between the two parties, [courts] permit recovery for mental anguish in only a few types of cases involving injuries of such a shocking and disturbing nature that mental anguish is a highly foreseeable result.” City of Tyler v. Likes, 962 S.W.2d 489, 496 (Tex. 1997).

The trial court made no findings—and there was no evidence in the record to support—that Appellants acted with malice or that either plaintiff suffered serious bodily injury. See id. And the “relationship between a mortgagor and a mortgagee is not a ‘special relationship’ under Texas law.” Blanche v. First Nationwide Mortg., 74 S.W.3d 444, 453 (Tex. App.—Dallas 2002, no pet.). So the Joneses’ evidence must demonstrate  “injuries  of  such  a  shocking  and  disturbing  nature that mental anguish is a highly foreseeable result.” City of Tyler v. Likes, 962 S.W.2d 489, 496 (Tex. 1997). It does not.

The trial court found that Consuelo Jones thought that the attempt to evict her was “a strike to her dignity.” 4Supp.CR 110-11, ¶¶ 58, 61. The court found this made Consuelo “emotionally distressed” and “ashamed.” Id. Gabriela, for her part according to the court’s finding, “reacted by crying and with sadness, pain, and anger.” Id. at 111. The court found the foreclosure proceedings caused Consuelo to “lose concentration” and “lose sleep.” Id. at 112. The court further found that the foreclosure proceedings caused Gabriela to take some time away from work, “ruined her holidays and time with her family,” and caused her to develop occasional hives. Id.

The trial testimony told a different story. Consuelo regularly participates in community efforts aimed at helping refugees at the border, and had done so as recently as a few week before the trial. 4RR 119:19-121:4. She further testified that any time she spent away from her community service activities was due to the illness of one of her daughters, for whom she cared. Id. Gabriela testified that she has a new job that she enjoys, which enables her to travel and wine and dine clients. 5RR 130:1-14. While the trial court findings make conclusory assertions that the Joneses’ daily lives have been disrupted, the actual testimony showed them to be living normal, productive lives.

The trial court made no findings that Appellants acted in a way that would make mental anguish a “highly foreseeable result.” See Likes, 962 S.W.2d at 496. And the findings the trial court did make about the Joneses suffering “ashamed,” “sadness pain and anger,” losing sleep, and even developing hives do not rise to the level of mental injury required to support mental anguish damages. The evidence is legally and factually insufficient to support the mental anguish damages awarded by the trial court, and the award should be vacated.

D.         The award of damages to the Joneses is not supported by the evidence.

1.           The evidence was legally and factually insufficient to support exemplary damages awarded to the Joneses.

Exemplary damages are only available where the plaintiff has recovered actual damages on a tort claim. Int’l Bank, N.A. v. Morales, 736 S.W.2d 622, 624 (Tex. 1987). So if this Court reverses the award of mental anguish damages on the Joneses’ tort claims, the punitive damages must also be reversed.

Even if the Court determines the lien is void or affirms liability on the Joneses wrongful foreclosure claim, neither of these claims supports exemplary damages. See Int’l Bank, N.A. v. Morales, 736 S.W.2d 622, 624 (Tex. 1987) (reversing award of exemplary damages in wrongful foreclosure suit); UMLIC VP LLC v. T&M Sales & Envtl. Sys., 176 S.W.3d 595, 616 (Tex. App.—Corpus Christi 2005, pet. denied) (explaining that “even with a finding of malice, appellees cannot recover exemplary damages based solely on wrongful foreclosure”); Boswell v. Hughes, 491 S.W.2d 762, 764 (Tex. Civ. App.—El Paso 1973, write ref’d n.r.e.) (finding trial court erred in awarding exemplary damages in wrongful foreclosure action); Covington v. Burke, 413 S.W.2d 158, 160 (Tex. Civ. App.—Eastland 1967, writ ref’d n.r.e.).

Even if the Joneses’ victories on their tort claims are not reversed, they have not made the evidentiary showing required to recover exemplary damages. Exemplary damage awards requires a clear and convincing showing of malice, fraud, or gross negligence. TEX. CIV. PRAC. & REM. CODE § 41.003(a). “The burden of proof may not be shifted . . . or satisfied by evidence of ordinary negligence, bad faith, or a deceptive trade practice.” Id., § 41.003(b).

Here, the trial court made findings that Appellants committed gross negligence, malice, and fraud as the underlying bases for its award of exemplary damages. 4Supp.CR 88, ¶30; id. at 91, ¶44. The findings associate the exemplary damages award with the Joneses’ IIED and fraud claims, as well as an unpleaded negligence claim.15 The pleadings and the evidence do not support these findings.

First, the Joneses did not plead gross negligence or malice as to any party, so the gross negligence finding is improper and cannot support an exemplary damages award. CR 484 (Joneses’ live pleading); See Carroll v. Carroll, 304 S.W.3d 414, 423 (Tex. App.—Waco 2008), rev’d on other grounds, 304 S.W.3d 366 (Tex. 2010) (award of exemplary damages improper where plaintiffs failed to plead malice, fraud, or gross negligence).

Beyond reciting the high legal standards for gross negligence16 and malice,17 the court made no findings regarding any specific acts by Appellants that satisfied those standards.

15 The Joneses pleaded negligence only as to Ocwen, though yet trial court’s findings erroneously relate to all Appellants.

16 See GMC v. Sanchez, 997 S.W.2d 584, 595 (Tex. 1999)

17 “[M]alice is defined as ‘a specific intent by the defendant to cause substantial injury or harm to the claimant.’” Richards v. Tebbe, No. 14-13-00413-CV, 2014 Tex. App.

There was likewise insufficient evidence to support a gross negligence or malice finding—no evidence adduced at trial demonstrated that Appellants acted with knowledge of an extreme degree of risk or with the intent to cause substantial injury or harm to the Joneses. Appellants merely sought to foreclose on the property the Joneses had used to secure a loan on which they defaulted. Normal foreclosure proceedings are not inherently risky or malicious activities. See, e.g., Baskett, 1996 Tex. App. LEXIS 1187, at *10.

As for the trial court’s fraud finding, that, too finds little support in the record. The trial court does not identify any specific “misrepresentation” supporting the fraud claim, nor identify any evidence supporting that the Joneses relied on a misrepresentation to their detriment. That’s because there is none. The record shows only that Appellants worked with the Joneses toward loan modification at every opportunity in an effort to keep them in the property, delaying the foreclosure for over a year. 11RR 417-505. LEXIS 6973, at *17 (Tex. App.—Houston [14th Dist.] June 26, 2014, no pet.) (quoting TEX. CIV. PRAC. & REM. CODE § 41.001).

There was no fraud. The Joneses’ fraud claim—which should fail on its own—cannot support an award of exemplary damages. The exemplary damages award should be reversed.

2.           If not reversed entirely, the exemplary damages award to the Joneses should be reduced because they exceeded the statutory cap by millions of dollars.

The trial court awarded Consuelo and Gabriela Jones $625,000 each in exemplary damages from both Trustee and Ocwen, for a total award of $1,250,000 each, and $2.5 million collectively. 2Supp.CR 90-91. This award far exceeds the statutory cap on exemplary damages.

Section 41.008 of the Civil Practice and Remedies Code caps exemplary damages at an amount not to exceed the greater of (1) $200,000 or (2) noneconomic damages (up to $750,000) plus two times economic damages. TEX. CIV. PRAC. & REM. CODE § 41.008(b). Here, neither of the Joneses were awarded economic damages (they elected recission of the foreclosure as opposed to money damages). Consuelo and Gabriela were awarded $350,000 and $250,000, respectively, in noneconomic damages for mental anguish. 2Supp.CR 90. So, merits of their claims for exemplary damages aside, under TEX. CIV. PRAC. & REM. CODE 41.008(b) Consuelo was entitled to at most $350,000 in exemplary damages, and Gabriela was entitled to at most $250,000.

In its conclusions of law, the trial court stated that the statutory cap on exemplary damages did not apply because Trustee and Ocwen committed “misapplication of fiduciary property” under Texas Penal Code § 32.45, which is a felony that would waive application of the statutory exemplary damages cap. See TEX. CIV. PRAC. & REM. CODE § 41.008(c). This conclusion is in error.

First, yet again, the Joneses did not plead or prove that Trustee and/or Ocwen “intentionally, knowingly, or recklessly misapplie[d] property [they] [held] as a fiduciary or property of a financial institution in a manner that involves substantial risk of loss to the owner of the property or to a person for whose benefit the property is held,” which are the elements of the offense of misapplication of fiduciary property. See TEX. PENAL CODE § 32.45. “In the absence of a plea and proof of cap- busting conduct, the exemplary damages cap applies as a matter of law.” Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 158 (Tex. 2015).

The trial court concluded that Trustee, Homeward, and Ocwen committed this felony in their capacities as “trustee” and “attorney-in-fact.”   While the court correctly identified that a trustee is a fiduciary, and that Trustee is a “trustee” in this case, it does not reconcile that Trustee is not a trustee for the Joneses in its capacity as trustee for the trust Ameriquest Mortgage Securities, Inc., Asset-Backed Pass-Through Certificates, Series 2004-R8. As such, Trustee’s duties do not run to the Joneses but to holders of the certificates issued by the investment trust. Similarly, servicing agents, like Ocwen and Homeward, serve as attorneys-in-fact for the owner of the loan, not for the borrowers. Texas law is clear that “a trustee is not to be held to the obligations of a fiduciary of the mortgagor or mortgagee.”        Townsend v. Barrett Daffin Frappier Turner & Engel, LLP, No. 09-12-00564-CV, 2013 Tex. App. LEXIS 13515, at *17 (Tex. App.—Beaumont Oct. 31, 2013, pet. denied) (citing Tex. Prop. Code Ann. § 51.0074(b). The Joneses did not plead or prove—and the parties did not litigate—that any of Appellants committed a felony sufficient to waive the statutory cap on exemplary damages. The trial court’s conclusion of law to the contrary was in error, the statutory cap applies, and to the extent this Court does not reverse the exemplary damages award in its entirety, it should be reduced to $350,000 for Consuelo and $250,000 for Gabriela.

3.           The attorney’s fees award to the Joneses was too high.

The Joneses sought $380,254.70 in attorney’s fees in their post- trial application. 4Supp.CR 39. Inexplicably, however, the Amended Final Judgment awarded the Joneses $400,000.00 in fees. 2Supp.CR 91. The evidence does not support any award of attorney’s fees, but, that aside, the trial court once again award the Joneses more than they asked for and more than the evidence supported.

Texas law provides for no recovery of attorney’s fees unless authorized by contract or statute. In re Nalle Plastics Family Ltd. P’ship, 406 S.W.3d 168, 172 (Tex. 2013). Though the court did not say under which statutory provision it awarded fees, the only potential avenue for the Joneses to obtain a fee award in this case is pursuant to their claim for declaratory relief, because the Declaratory Judgment Act permits discretionary fee awards to the prevailing party. TEX. CIV. PRAC. & REM. CODE § 37.009; Sava Gumarska in Kemijska Industria D.D. v. Advanced Polymer Scis., Inc., 128 S.W.3d 304, 323 (Tex. App.—Dallas 2004, no pet.). “But the Act may not be used to obtain attorney’s fees when the plaintiff’s claim is to quiet title.” Moroney v. St. John Missionary Baptist Church, 636 S.W.3d 698, 707 (Tex. App.—Houston [14th Dist.]

2021, pet. denied) (emphasis added). The Joneses sought declaratory relief to quiet title to the property. They are therefore not entitled to attorney’s fees under the Declaratory Judgment Act, which is their only possible statutory basis for recovering fees.

Even if the Joneses were entitled to fees, they were not entitled to $400,000 worth of fees for pursuing their declaratory judgment action. Such an award is reviewed for abuse of discretion. See Advanced Polymer Scis., 128 S.W.3d at 323. The trial court abused its discretion by awarding $400,000 in fees in this case—more than either award of noneconomic damages to Consuelo and Gabriela.

The Joneses failed to segregate the fees between those incurred on the claim for which they may be recoverable (declaratory judgment), and those incurred on their other (non-recoverable) claims (intentional infliction of emotional distress, abuse of process, fraud, wrongful foreclosure, and wrongful eviction). “Because ‘Texas law does not allow for recovery of attorneys’ fees unless authorized by statute or contract,” attorney’s fee claimants ‘have always been required to segregate fees between claims from which they are recoverable and claims for which they are not.’” D&R Constructors, Inc. v. Tex. Gulf Energy, Inc., No. 01-15-00604-CV, 2016 Tex. App. LEXIS 9611 *66; 2016 WL 4536959 (Tex. App.—Houston [1st Dist.] Aug. 30, 2016, pet. denied).

Here, The Joneses offered nothing other than counsel’s unsupported assertion that segregation would be “highly impracticable, if not impossible,” and the similarly unsupported statement that “20% of our time could be for work only in connection with claims for which attorney’s fees are not recoverable.” 4Supp.CR 41. But the majority of this case dealt with the wrongful foreclosure claim, and the Joneses’ efforts to prove a defect in the foreclosure sale that could support such a claim. If they are entitled to fees (they are not), the Joneses’ award of fees should be drastically reduced.

E.          The damages awarded to MARCC were also excessive.

1.           MARCC’s compensatory damages, if any, should have been limited to the purchase price they paid for the property.

“The proper measure of damages for breach of . . . warranty of good title is the consideration paid for the conveyance.” Sun Exploration and Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987). Accordingly, to the extent MARCC recovers on its breach of warranty of title claim, the measure of damages is the $96,136.95 that MARCC paid to purchase the property, and MARCC is not entitled to recover damages for any alleged lost rental value.      The trial court’s damages award, therefore, should be reversed to the extent it awards MARCC $196,961.00, over $100,000 more than MARCC was legally entitled to.

2.           MARCC waived recovery of exemplary and consequential damages in its purchase agreement with Appellants.

In the purchase agreement, MARCC expressly agreed that Trustee “shall not be liable to buyer for any special, consequential or punitive damages whatsoever, whether in contract, tort (including negligence and strict liability) or any or legal or equitable principle, or any other such expense or cost arising from or related to this agreement or a breach of this agreement.” 11RR 371, ¶ 12.5. Because of this express contractual limitation, even if MARCC recovers on its fraud claim, it still cannot recover the lost rental income as a consequential damage. And the express waiver of exemplary damages, of course, means those damages are unavailable, and should be reversed. At the most, MARCC can recover the $96,136.95 purchase price of the property.

3.           MARCC was not entitled to recover attorney’s fees.

MARCC prevailed in the trial court on fraud and breach of warranty of title claim. Attorney’s fees are not available for either cause of action. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 313 (Tex. 2006) (fraud); Adams v. Cox, 150 S.W. 1195 (Tex. Civ. App.—Austin 1912, no writ) (breach of warranty). It was thus error to award attorney’s fees to MARCC.

CONCLUSION AND PRAYER

Ocwen Loan Servicing, LLC, Homeward Residential, Inc. (f/k/a American Home Mortgage Servicing, Inc.), and Deutsche Bank National Trust Company, As Trustee for Ameriquest Mortgage Securities Inc., Asset-Backed Pass-Through Certificates, Series 2004-R8 respectfully request that the Court reverse the trial court’s liability holdings on the summary judgment record, and render judgment for Appellants on all claims asserted against them.

Alternatively, should the court weigh the liability evidence submitted at the bench trial, Appellants ask that the Court reverse the judgment of the trial court for legally and/or factually insufficient evidence, and render judgment for Appellants.

In the further alternative, should the Court affirm the trial court’s judgment as to liability, Appellants request that damages be eliminated to the extent they are unsupported by the evidence, and/or reduced to the extent that they are limited by statute.

Appellants further request in the alternative that, should the Court affirm the trial court’s voiding of DTNB as Trustee’s home equity lien on the property, the Court reverse the trial court’s denial of Appellants’ request for declaratory relief on their conditional counterclaim for subrogation.

JUL 2, 2015 | REPUBLISHED BY LIT: NOV 5, 2023

MEMORANDUM OPINION

Before Justices Rodriguez, Garza and Longoria: Memorandum Opinion by Justice Garza

This appeal concerns residential property situated in Mission, Texas. Appellant, Deutsche Bank National Trust Company, as Trustee for Ameriquest Mortgage Securities,

Inc., Asset-Backed Pass-Through Certificates, Series 2004-R8 (“Deutsche Bank”) challenges the trial court’s judgment awarding possession to appellees Consuelo Jones, Edwin Jones, Gabriela Jones, and all occupants of the subject property (collectively, “the Joneses”).

By four issues, Deutsche Bank contends:

(1) the trial court improperly considered “evidence and issues other than the superior right to immediate possession”;

(2) the evidence was factually insufficient to support the judgment;

(3) the trial court erred in awarding possession to the Joneses because they “did not request such relief”;

and

(4) Deutsche Bank conclusively established its right to possession.

We affirm.

I.  Background

In 2004, the Joneses took out a home equity loan payable to Ameriquest Mortgage Company (“Ameriquest”), Deutsche Bank’s predecessor-in-interest, and secured by a lien on the subject property.

The security agreement provided in relevant part that, in the event of a foreclosure sale, Borrower [the Joneses] or any person holding possession of the Property through Borrower shall immediately surrender possession of the Property to the purchaser at that sale.

If possession is not surrendered, Borrower or such other person shall be a tenant at sufferance and may be removed by writ of possession or other court proceeding.

In 2011, Deutsche Bank filed an application for judicial foreclosure in the 93rd District Court of Hidalgo County.

See TEX. R. CIV. P. 736.

The district court, noting that the Joneses had not filed a response, granted Deutsche Bank’s application and rendered an order authorizing it to proceed with a foreclosure sale.

On January 15, 2013, a “Notice of Trustee’s Sale” was recorded in the public records of Hidalgo County, stating that the subject property would be sold by substitute trustee Connie Medley on February 5, 2013.

Deutsche Bank purchased the property for $84,319 at the foreclosure sale.

On April 10, 2013, a notice was sent to the Joneses directing them to vacate the subject property within three days.

See TEX. PROP. CODE ANN. § 24.005(b) (West, Westlaw through Ch. 46, 2015 R.S.)

(providing that a landlord must generally give a tenant-at-sufferance at least three days’ written notice to vacate before filing a forcible detainer suit).

When the Joneses failed to do so, the bank filed a forcible detainer action in justice court in Hidalgo County.

The justice court rendered judgment awarding possession to Deutsche Bank and the Joneses appealed to the County Court at Law Number 8 of Hidalgo County.

After a bench trial de novo on April 28, 2014, the county court rendered judgment awarding possession to the Joneses.

It later filed findings of fact and conclusions of law which state in their entirety as follows:

On April 28, 2014, the Court held a trial on the merits on a suit for forcible detainer brought by Deutsche Bank National Trust Company (“Deutsche Bank”) against Edwin Jones, Gabriela Jones, and Consuelo Jones (collectively “the Joneses”).

All parties, in person and/or through their attorneys of record, appeared and announced ready for trial to the bench.

Though given the opportunity, none of the parties presented witnesses at trial.

The Court was not called upon to take judicial notice of any document not presented at trial.

The Court’s determination as to which party was entitled to immediate possession of the Property was based solely on the evidence presented at the trial on the merits.

Based on that evidence, the Court awarded possession of a property located at 2028 E. 28th St., McAllen [sic], Texas (“the Property”) to the Joneses.

Upon reviewing the evidence presented at trial, the Court issues the following findings of fact and conclusions of law.

Findings of Fact

1.            The Joneses had a home equity loan with Ameriquest Mortgage Company (“the Loan”). The Loan was assigned to Deutsche Bank.

2.            On April 12, 2011, American Home Mortgage Servicing, Inc. (“the Applicant”), as servicing agent for Deutsche Bank, filed an application for an Order permitting foreclosure of lien created under Texas Constitution, Article XVI, Section 50A(6), in Cause No. C-964-11-B, 93rd District Court, Hidalgo County, Texas.

3.            On November 30, 2011, the 93rd District Court of Hidalgo County, Texas entered an Order for Foreclosure, authorizing the Applicant to proceed with the foreclosure of the Property.

4.            The Order for Foreclosure expressly required the Applicant to give a copy of the Order for Foreclosure to the Joneses. Deutsche Bank presented no evidence of compliance.

5.            On January 15, 2013, a Notice of Trustee’s Sale for the Property was issued by Homeward Residential, Inc., as servicer for Deutsche Bank. Homeward Residential, Inc., is not the Applicant who secured the Order for Foreclosure.

6.            No evidence was presented showing that Homeward Residential, Inc., ever made an application for an order permitting foreclosure of the Property, nor was any evidence presented showing that a court entered an order authorizing Homeward Residential, Inc., to proceed with foreclosing on the Property, nor was there sufficient evidence showing that Deutsche Bank had superior right to immediate possession.

7.            The Substitute Trustee’s Deed recites an Order to Proceed with Notice of Foreclosure Sale purportedly entered on March 20, 2011, in Cause No. 964-11-B, in the 93rd Judicial District Court, Hidalgo County, Texas. However, no such order was attached to the Substitute Trustee’s Deed.

8.            Deutsche Bank presented no evidence demonstrating (1) that the Joneses had been provided with a proper demand for possession; (2) that the Joneses’ period of time to vacate the Property had expired; and/or (3) that the Joneses had refused to surrender possession in response to a proper demand for possession; (4) that Deutsche Bank had a superior right to immediate possession.

Conclusions of Law

1.                  At trial, Deutsche Bank presented legally insufficient evidence showing that the Joneses had been provided with a proper demand for possession.

2.                  At trial, Deutsche Bank presented legally insufficient evidence showing that the Joneses’ period of time to vacate the Property had expired.

3.                  At trial, Deutsche Bank presented legally insufficient evidence showing that the Joneses had refused to surrender possession in response to a proper demand for possession.

4.                  At trial, Deutsche Bank did not show sufficient evidence to demonstrate a superior right to immediate possession.

5.                  Based on the evidence presented at trial, Deutsche Bank failed to carry its evidentiary burden for establishing that it had a right of immediate possession of the Property.

This appeal followed.

II.  Discussion

A.           Applicable Law

An action for forcible detainer is the judicial procedure for determining the right to immediate possession of real property.

It’s The Berrys, LLC v. Edom Corner, LLC, 271 S.W.3d 765, 769 (Tex. App.—Amarillo 2008, no pet.).

It exists to provide a speedy, simple and inexpensive means for settling the right to possession of premises. Id.

In order to prevail in its forcible detainer action, Deutsche Bank had to prove that

(1) it owned the subject property by virtue of a foreclosure sale deed,

(2) the Joneses became tenants at sufferance when the property was sold,

(3) Deutsche Bank gave the Joneses notice to vacate the premises,

and

(4) the Joneses refused to vacate the premises.

See Elwell v. Countrywide Home Loans, Inc., 267 S.W.3d 566, 568–69 (Tex. App.—Dallas 2008, pet. dism’d w.o.j.);

see also TEX. PROP. CODE ANN. § 24.002 (West, Westlaw through Ch. 46, 2015 R.S.)

(“A person who refuses to surrender possession of real property on demand commits a forcible detainer if the person . . . is a tenant at will or by sufferance, including an occupant at the time of foreclosure of a lien superior to the tenant’s lease    ”).

A prevailing party in a suit for forcible detainer “is entitled to a judgment for possession of the premises and a writ of possession.”

Id. § 24.0061(a) (West, Westlaw through Ch. 46, 2015 R.S.).

Jurisdiction to hear forcible detainer actions is vested in justice courts, and on appeal, to county courts for trial de novo.

Id. § 24.004 (West, Westlaw through Ch. 46, 2015 R.S.); see Dormady v. Dinero Land & Cattle Co., 61 S.W.3d 555, 557 (Tex. App.— San Antonio 2001, pet. dism’d w.o.j.) (op. on reh’g).

But justice courts are expressly deprived of jurisdiction to determine or adjudicate title to land.

TEX. GOV’T CODE ANN. § 27.031(b)(4) (West, Westlaw through Ch. 46, 2015 R.S.).

Thus, neither a justice court nor a county court on appeal can resolve questions of title beyond the immediate right to possession.

See Bacon v. Jordan, 763 S.W.2d 395, 396 (Tex. 1988); Rice v. Pinney, 51 S.W.3d 705, 708–09 (Tex. App.—Dallas 2001, no pet.).

Moreover, the justice court lacks jurisdiction when “the right to immediate possession necessarily requires resolution of a title dispute.”

Lopez v. Sulak, 76 S.W.3d 597, 605 (Tex. App.—Corpus Christi 2002, no pet.); see Dormady, 61 S.W.3d at 557; Rice, 51 S.W.3d at 709.

B.           Consideration of Title Issues

By its first issue, Deutsche Bank contends that the trial court improperly considered evidence concerning issues other than the immediate right to possession of the subject property.

In particular, it contends that [the Joneses] argued that there [sic] supposed irregularities in the underlying order authorizing foreclosure, the appointment of the substitute trustee, the authority of the trustee who issued the notice of sale, and the authority of the trustee who conducted the sale. . . . None of these arguments had any effect on the determination of the issue of whether Deutsche Bank was entitled to a judgment of possession, yet the Trial Court relied on them in making its judgment.

In support of its argument that the trial court “relied” on title issues in making its ruling, Deutsche Bank points to findings of fact numbers 2, 4, 5, 6 and 7.

We disagree that the trial court erred.

Deutsche Bank does not dispute that the trial court’s conclusions of law, including its ultimate legal conclusion in favor of the Joneses, pertained only to the issue of immediate possession and did not adjudicate validity of title.

Moreover, Deutsche Bank does not contend, and we do not find, that the issue of possession could not be decided without first determining the issue of title, such that the justice and county courts would have lacked jurisdiction.

See Lopez, 76 S.W.3d at 605.

The referenced findings of fact discuss the Substitute Trustee’s Deed by which Deutsche Bank obtained ownership of the subject property, but they do not purport to determine the validity of the deed.

As this Court has observed:

The right to immediate possession can be determined separately from the right to title in most cases, and the Texas Legislature established just such a system [by enacting the forcible detainer statute].

Rice, 51 S.W.3d at 710 (citing Scott v. Hewitt, 90 S.W.2d [816,] 818–19 [(1936)]).

In cases challenging the validity of a trustee deed the legislature contemplated concurrent actions in the district and justice courts to resolve issues of title and immediate possession, respectively. Id. Forcible detainer actions in justice courts may be brought and prosecuted concurrently with suits to try title in district court.

Id. at 709; Haith

This Court has previously held that a judgment of possession in a forcible detainer action is a determination only of the right to immediate possession and does not determine the ultimate rights of the parties to any other issue in controversy relating to the realty in question.

Martinez [v. Beasley], 572 S.W.2d [83,] 85 [(Tex. Civ. App.—Corpus Christi 1978, no writ)].

An action in forcible detainer in the justice court is one thing, and an action in the district court to determine whether a deed to the premises involved in the forcible detainer action should be set aside is something else.

Id. Lopez, 76 S.W.3d at 605.

Here, even assuming that the trial court considered the substitute trustee’s deed in reaching its ruling, that did not deprive the court of jurisdiction because resolution of title was not necessary to determining the issue of possession.

See id.

Instead, as the trial court’s findings and conclusions illustrate, its ruling was based entirely on Deutsche Bank’s failure to satisfy its evidentiary burden to show a superior right to possession—ownership of the property was not at issue.

Deutsche Bank’s first issue is overruled.

C.           Evidentiary Sufficiency

By its second issue, Deutsche Bank contends that the evidence was factually insufficient to support the trial court’s judgment.

By its fourth issue, it argues that it conclusively established its right to possession; we construe this argument as challenging the legal sufficiency of the evidence supporting the judgment.

See City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005).

1.            Standard of Review

In an appeal from a bench trial, the trial court’s findings of fact have the same weight as a jury verdict.

Aland v. Martin, 271 S.W.3d 424, 428–29 (Tex. App.—Dallas 2008, no pet.);

Butler v. Comm’n for Lawyer Discipline, 928 S.W.2d 659, 662 (Tex. App.— Corpus Christi 1996, no writ).

We review the sufficiency of the evidence supporting the findings by applying the same standards we use in reviewing the legal and factual sufficiency of the evidence supporting a jury verdict.

Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994);

Aland, 271 S.W.3d at 429.

Evidence will be legally insufficient to support a finding if, among other things, the evidence conclusively establishes the opposite of a fact vital to the finding.

City of Keller, 168 S.W.3d at 819.

A matter is conclusively established if reasonable people could not differ as to the conclusion to be drawn from the evidence.

Id. at 816.

We view the evidence in the light most favorable to the finding, indulge every reasonable inference in support of the finding, credit favorable evidence if a reasonable fact-finder could, and disregard contrary evidence unless a reasonable factfinder could not.

Id. at 807, 822.

In reviewing factual sufficiency, we consider all the evidence in a neutral light and will set aside the judgment only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust.

Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986);

Corpus Christi Day Cruise, LLC v. Christus Spohn Health Sys. Corp., 398 S.W.3d 303, 311 (Tex. App.—Corpus Christi 2012, pet. denied).

In a bench trial, the trial court assesses the credibility of the witnesses, determines the weight to be given to their testimony, and resolves conflicts and inconsistencies in the testimony.

See City of Keller, 168 S.W.3d at 819; Hinkle v. Hinkle, 223 S.W.3d 773, 778 (Tex. App.—Dallas 2007, no pet.).

We review a trial court’s conclusions of law de novo, evaluating them independently and determining whether the court correctly drew the legal conclusions from the facts.

BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Bollner v. Plastics Solutions of Tex., Inc., 270 S.W.3d 157, 166 (Tex. App.—El Paso 2008, no pet.); Dallas Morning News v. Bd. of Trs., 861 S.W.2d 532, 536 (Tex. App.—Dallas 1993, writ denied).

Conclusions of law will be upheld on appeal if the judgment can be sustained on any legal theory supported by the evidence.

Mack v. Landry, 22 S.W.3d 524, 528 (Tex. App.—Houston [14th Dist.] 2000, no pet.).

2.            Analysis

At trial on April 28, 2014, counsel for both parties made arguments but no witnesses testified.

The Joneses’ counsel argued that “Deutsche Bank completely messed up the foreclosure on this deal” because “the applicant who obtained the order permitting the foreclosure was not the entity that ended up foreclosing.”

Counsel also argued that the substitute trustee who was appointed in the Notice of Trustee’s Sale was not the same substitute trustee that conducted the sale.

Deutsche Bank offered two exhibits into evidence:

(1) the 2004 security agreement between the Joneses and Ameriquest;

and

(2) the 2013 Substitute Trustee’s Deed granting title to Deutsche Bank, which was accompanied by a copy of the Notice of Trustee’s Sale dated January 15, 2013.1

1 The Notice of Trustee’s Sale states that the substitute trustee is Connie Medley, whereas the Substitute Trustee’s Deed states that the substitute trustee is Monty Medley. We do not address this discrepancy because the trial court’s ruling was not based on the identity of the substitute trustee.

These exhibits were insufficient to show the elements required to prevail in a forcible detainer action.

As noted, Deutsche Bank was required to show that

(1) it owned the subject property by virtue of a foreclosure sale deed,

(2) the Joneses became tenants at sufferance when the property was sold,

(3) Deutsche Bank gave the Joneses notice to vacate the premises,

and

(4) the Joneses refused to vacate the premises.

See Elwell, 267 S.W.3d at 568–69; see also TEX. PROP. CODE ANN. § 24.002.

Even assuming that the deed established the first element and the security agreement established the second element, neither exhibit even arguably established the third or fourth elements.

That is, there was no evidence adduced at trial establishing either that Deutsche Bank gave the Joneses notice to vacate or that the Joneses refused to vacate.

See Elwell, 267 S.W.3d at 568–69.

Deutsche Bank contends that both the third and fourth elements were satisfied by the April 10, 2013 notice to vacate sent by its counsel to the Joneses.

An unsworn copy of this notice appears in the appellate record before this Court,2 but it is undisputed that the notice was not admitted as evidence at trial.

Deutsche Bank argues that we should nevertheless consider this document in our sufficiency analysis because the trial court stated in its final judgment that it “took judicial notice of all documents in its file” and “considered the totality of the evidence and arguments presented.”

We disagree.

The trial court stated in its findings and conclusions that it based its ruling “solely on the evidence presented at the trial on the merits” and that it was “not called upon to take judicial notice of any document not presented at trial.”

Findings of fact and conclusions of law filed after a judgment are controlling if there is any conflict

2 The notice to vacate appears within a series of documents referred to in the clerk’s record table of contents as “Civil Appeal.” It is not clear whether or when the notice was ever presented to the trial court.

between them and the judgment.

Zorilla v. Wahid, 83 S.W.3d 247, 254 (Tex. App.— Corpus Christi 2002, no pet.), overruled on other grounds by Iliff v. Iliff, 339 S.W.3d 74 (Tex. 2011).

Additionally, when a trial court takes judicial notice of a file, the documents in that file—even if sworn—are not treated as substantive evidence or considered in an evidentiary sufficiency analysis if they are not actually introduced as evidence at trial.

See Barnard v. Barnard, 133 S.W.3d 782, 789 (Tex. App.—Fort Worth 2004, pet. denied)

(“As a general rule, documents not admitted into evidence are not considered by an appellate court.

A court may take judicial notice of its own files and the fact that a pleading has been filed in a case. . . . A court may not, however, take judicial notice of the truth of allegations in its records.”);

Tex. Dep’t Of Pub. Safety v. Claudio, 133 S.W.3d 630, 633 (Tex. App.—Corpus Christi 2002, no pet.)

(“A court may properly take judicial notice of pleadings that have been filed. However, a court may not take the allegations in the pleadings to be true absent testimony, other proof, or admissions by the other party   The court taking judicial notice of the contents of the file does not elevate those averments into proof.”);

see also Rios v. Tex. Dep’t of Family & Protective Servs., No. 03- 11-00565-CV, 2012 WL 2989237, at *7 n.5 (Tex. App.—Austin July 11, 2012, no pet.) (mem. op.)

(“While a court can take judicial notice of its own files and the fact that a pleading has been filed in a case, a court may not take judicial notice of the truth of allegations in its records, including affidavits.”)

Because there was no evidence adduced at trial to establish two of the elements required in a forcible detainer action, Deutsche Bank did not conclusively establish its entitlement to judgment and the trial court’s judgment was not contrary to the weight of the evidence.

See City of Keller, 168 S.W.3d at 319; Cain, 709 S.W.2d at 176.

Therefore, we conclude that the evidence was sufficient, both legally and factually, to support the trial court’s judgment awarding possession to the Joneses.

We overrule Deutsche Bank’s second and fourth issues.

D.           Failure to Request Possession Order

By its third issue, Deutsche Bank contends that the trial court erred in awarding possession to the Joneses because the Joneses “never requested an order of possession.”

See In re Russell, 321 S.W.3d 846, 855 (Tex. App.—Fort Worth 2010, orig. proceeding)

(“A trial court abuses its discretion by awarding relief to a person who has not requested such relief in a live pleading.”).

This issue is without merit.

The live pleading before the county court was the Joneses’ appeal of the justice court’s order of possession in favor of Deutsche Bank.

Obviously, the underlying justice court suit—a forcible detainer action filed by Deutsche Bank—requested adjudication of possession of the subject property.

Deutsche Bank directs us to no authority, and we find none, stating that a party appealing a justice court’s ruling to the county court must file an explicit pleading in the county court requesting the relief that was already requested at the justice court.

We overrule Deutsche Bank’s third issue.

III.  Conclusion

The trial court’s judgment is affirmed.

DORI CONTRERAS GARZA,
Justice

Delivered and filed the 2nd day of July, 2015.