(972) (972) Facsimile

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1 THE IN OF APPEALS COURT SUPREME JUDICIAL DISTRICT FIFTH TEXAS DALLAS, On Appeal from the 296 TM OF THE APPELLEES BRIEF HAWKINS AND ANITA HAWKINS LATROY & MILLER, P.C. PRAGER A. MILLER ROBERT Bar No State Quorum Drive, Suite Texas Dallas, Telephone (972) (972) Facsimile FOR APPELLEES LATROY ATTORNEYS ANITA HAWKINS HAWKINS, CV No. ZAKARIA AND SHAGUFTA SIDDIQ, Appellants, vs. LATROY AND ANITA HAWKINS, Appellee. District Court, Collin County, Texas the Hon. James R. Fry, Visiting Judge, Presiding ORAL ARGUMENT REQUESTED

2 Appellees believe that oral argument is appropriate in this marer so that the Court ORAL ARGUMENT REQUESTED may better analyze the legal and factual issues presented in this appeal. Oral argument will help the court understand the facts and how the law applies to those facts. BRIEF OF THE APPELLEES

3 judgment lien is enforceable against the property because the alleged equitable The or right to the property of the Siddiqs did not predate the judgment lien as no title Hawkins judgment lien is enforceable against the property because there was The evidence of resulting or parol trusts and there was no unjust enrichment of insufficient Hawkins. Conclusions of Law 9, 10 and 11 and Additional Finding 18(I) and (g) the supported by legally sufficient evidence or are not against the great weight and are preponderance of the evidence 1 Reply to Appellant's Issues No. 3: The Abstract of Judgment was Properly C. Indexed Hawkins" abstracts of judgments were properly indexed in the real property The of Dallas County and Collin County Texas were in the chain of title and records Hawkins prevailed so the trial court's awarded attorney's fees should be The 2 sustained. TABLE OF CONTENTS ORAL ARGUMENT REQUESTED TABLE OF AUTHORITIES iv PRESENTED 1 ISSUES Reply to Appellant's Issue No. I The Siddiqs Did Not Have an Equitable Title or A. Right to the Property I title was acquired until the Siddiqs took possession and paid the full equitable price of the property. Conclusions of Law 9, 10 and ]1 and Additional purchase Findings 14(0 and ) are supported by legally sufficient evidence or are not against the great weight and preponderance of the evidence 1 B. Reply to Appellant's Issue No. 2: No Resulting Trast or Parol Trust 1 constructive notice to the Siddiqs of the claimed lien. Findings of Fact 20 provided Additional Finding 11(1) and Conclusions of Law 4, 7, 10 and 11 are supported by and legal evidence or are not against the great weight and preponderance of the sufficient 1 evidence D. Reply to Appellant's Issue No. 4: Attorney's Fees Awarded 2 STATEMENT OF FACTS 2 EVIDENCE SUPPORTING THE FINDINGS OF FACT AND CONCLUSIONS 7 BRIEF OF THE APPELLEES ii

4 of Law No. 3 8 Conclusion of Law No. 4 8 Conclusion of Law No. 7 8 Conclusion of Law No. 9 8 Conclusion of Law No. 1 7 Conclusion of Law No. 2 7 Conclusion of Law No. I0 9 Conclusion of Law No. i 1 9 Conclusion of Fact No Finding Finding of Fact No. 11(1) 9 Additional Finding of Fact No. 14(i) 10 Additional Finding of Fact No. 14(j) 10 Additional Finding of Fact No. 18(f) 10 Additional Finding of Fact No. 18(g) 11 Additional SUMMARY OF THE ARGUMENT 11 ARGUMENT 13 STANDARD OF REVIEW 13 REPLY TO APPELLANT'S ISSUE NO. 1: THE SIDDIQS DID NOT HAVE AN EQUITABLE TITLE OR RIGHT TO THE PROPERTY 15 Prop. Code Et Seq. Has Changed the Law 21 Tex. Siddidqs Did Not Pay Nor Take Possession of the Property Until The March 14, REPLY TO APPELLANT'S ISSUE NO. 2: NO RESULTING TRUST OR PAROL TRUST 24 D. REPLY TO APPELLANT'S ISSUE NOS. 3 AND 4 26 NO. 3 Abstract of Judgment was Properly lndexed 26 ISSUE NO. 4 Attorney's Fees Awarded 29 ISSUE CONCLUSION 29 CERTIFICATE OF SERVICE 31 APPENDIX 32 BRIEF OF THE APPELLEES iii

5 20 denied v. Smith, 269 S.W.3d 222 (Tex. App. Texarkana 2008, review denied) Casstevens vs. Johnson, 257 S.W. 682 (Tex. Civ. App.- El Paso 1923 rev'd 272 S.W Tex. Darr I7 1925) vs. Gonzalez, 997 S.W.2d 784 (Tex. App. Austin 1999, no pet.) 20 Gaona McBryde & Company vs. Heyland, 74 S.W.3d 906 (Tex. App. Dallas 2002, Hoffman denied) 13, 29 review vs. Bryson, 614 S.W.2d 930 (Tex. App. Amarillo 1981) I8 Jensen vs. Darr, 272 S.W (Tex. 1925) 17 Johnson vs. Parmer, 114 S.W.2d 677 (Tex. Civ. App. Amarillo 1938) 17 Lusk ) v Bishop, 201 S.W.3d 290, (Tex. App Dallas 2006) 24 Troxel Bill 336 Enrolled Version 74 th Legislature 22 Senate Loc. Gov't Code (b) 28 Tex. Prop. Code Tex. Prop. Code 5.076(a) 22 Tex. Prop. Code Tex. Prop. Code Tex. Prop. Code Tex. Prop. Code (b) 28 Tex. TABLE OF AUTHORITIES Case s vs. Douglas, 26 Tex. 225 (Tex. 1862) 16 Blankenship Company vs. Harvey, 46 S.W.3d 282 (Tex. App. Fort Worth 2001, review Cadle vs. Cadle Company, 257 S.W.3d 291 (Tex. App. Dallas 2008, review denied) Murray 27, 29 I3, Central Bank of Dallas vs. JHJ Investments Company, 835 S.W.2d 813 (Tex. App. Park Worth I992) 19 Fort Texas American Bank/Levelland vs. Resendez, 706 S.W.2d 343 (Tex. App. Amarillo v. Robinson, 2009 WL , 2009 Tex. App. Lexis 5982 (Tex. App. Tyler Williams mem.op.) , Statutes Tex. Prop. Code (1) 28 Rules Texas Rule of Appellate Procedure 38.1 (g) 2 BRIEF OF THE APPELLEES iv

6 weight and preponderance of the evidence. enforceable against the property because there was Hawkins. Conclusions of Law 9, 10 and 11 and Additional Findings 18(f) and (g) are supported by legally sufficient evidence or are not against the great weight and preponderance of the evidence. Reply to Appellant's Issue No. 3: The Abstracts of Judgment were C. Indexed Properly provided constructive notice to the Siddiqs of the claimed lien. Findings of Fact 20 and ISSUES PRESENTED Reply to Appellant's Issue No. 1: The Siddiqs Did Not Have an Equitable A. or Right to the Property Title The judgment lien is enforceable against the property because the alleged equitable title or fight to the property of the Siddiqs did not predate the judgment lien as no equitable title was acquired until the Siddiqs took possession and paid the full purchase price of the property. Conclusions of Law 9, 10 and 11 and Additional Findings 14(i) and (j) are supported by legally sufficient evidence or are not against the great B. Reply to Appellant's Issue No. 2: No Resulting Trust or Parol Trust The Hawkins judgment lien is insufficient evidence of resulting or parol trusts and there was no unjust enrichment of the The Hawkins' abstracts of judgments were properly indexed in the real property records of Dallas County and Collin County Texas, were in the chain of title and Additional Finding 11(1) and Conclusions of Law 4, 7, 10 and 11 are supported by sufficient legal evidence or are not against the great weight and preponderance of the evidence. BRIEF OF THE APPELLEES 1

7 Appellants' statement of facts contains argument in direct contradiction of the following statement of facts, Appellee requests that the court consider all of the facts Stipulated Fact 8, Court Clerk's Record 79. D. Reply to Appellant's Issue No. 4: Attorney's Fees Awarded The Hawkins prevailed so the trial court's award of attorney's fees should be sustained. STATEMENT OF FACTS Texas Rule of Appellate Procedure 38.1(g). Appellee does not agree with the argument and spin that Appellants have put on the facts. Ira certain fact is not contradicted, by the stated by Appellant to be contradicted. 1. LaTroy and Anita Hawkins obtained a judgment against Steven Penhollow and Penhollow Custom Homes, LLC on May 22, Finding of Fact 10, Clerk's Record 127, Plaintiff's Exhibits 18 and 19, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2d and 2e), Court Reporter's Record Vol. 2, 85:11-14, 2. The Hawkins filed abstracts of judgment in Collin County on June 12, 2007 and in Dallas County on June 15, Plaintiffs' Exhibits 18 and 19 Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2d and 2e). Stipulated Fact 9 Court Clerk's Record The abstracts of judgment were recorded in the alphabetical index of both counties by the name of the Plaintiffs LaTroy and Anita Hawkins and by the names of the Defendants Steven J. Penhollow and Penhollow Custom Homes, LLC. Plaintiffs" BRIEF OF THE APPELLEES 2

8 litigation to Penhollow, Inc. Plaintiffs' Exhibit 10 Court Reporter's Record Vol. 4. Finding of Fact 14, Court Clerk's Record , 2006; $20,000 on December I5, 2006 and $60,000 on December 18, Plaintiffs" BRIEF OF THE APPELLEES 3 Exhibits 20 and 21, Court Reporter's Record Vol. 4. Court Reporter's Record Vol. 3, 47:17-25 and 48:1-18 (see Hawkins' Appendix Tab lc). 4. Steven J. Penhollow and Penhollow Custom Homes filed a Motion for New Trial which delayed the ability to obtain Writs of Execution until 105 days from May 22, 2007 or until September 4, Court Reporter's Record VoI. 3, page 31: On July 12, 2007 after the abstracts of judgment were filed, Penhollow Custom Homes transferred 14 Balmoral, Richardson Texas, the property in dispute in this 6. John Penhollow and Penhollow, Inc. prior to July 12, 2007 were aware of the entry of the judgment against Steven J. Penhollow and Penhollow Custom Homes, LLC. Court Reporter's Record Vol. 2, 94:22-25, 95:1; 113: On March 4, 2008 Constable Bob Bell by and through Deputy Constable Richard Harris executed a Notice of Constable Sale to foreclose the Hawkins' judgment lien on 14 Balmoral. Defendants' Exhibit 1 Court Reporter's Record Vol On December 15, 2006 the Siddiqs and Penhollow Custom Homes, LLC signed a con 'act to construct a residence on the lot at 14 Balmoral which was intended to be the Siddiqs residence. Plaintiffs' Exhibit 3, Court Reporter's Record Vol. 2, 34:17-20, Court Clerk's Record 78, Stipulated Fact The Siddiqs paid Penhollow Custom Homes, LLC $20,000 on September Exhibit 4 Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2a).

9 September as an earnest money deposit for the purchase of the lot. Plaintiffs' Exhibit 2 from Cresswell Enterprises, Inc. only $40,000 of Dr. Siddiq's deposit was available to I4. Penhollow Inc. signed a contract to convey 14 Balmoral to the Siddiqs on John Penhollow and Penhollow, Inc. were aware of the writ of execution served on Court Reporter's Record Vol. 2, 94:22-25, 95:1-4, Exhibit 22 Court Reporter's Record BRIEF OF THE APPELLEES The $60,000 check dated December 18, 2006 was not deposited by?emhollow Custom Homes until December 27, Plaintiffs' Exhibit 4 Court Reporter's Record Vol. 4 (see Hawkins' Appendix 2@ 11. Penhollow Custom Homes only used $12,000 of the initial $20,000 paid in Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2b). 12. At the closing of the purchase of the lot by Penhollow Custom Homes, LLC pay towards the purchase price. Plaintiffs' Exhibits 4, 5 and 6. Court Reporter's Record Vol. 4 (for Plaintiffs' Exhibit 4 see Hawkins' Appendix Tab 2a), Court Reporter's Record Vol. 2, I00: The remaining $202, was paid by Penhollow, Inc. Court Reporter's Record Vol. 2, 79:13-16; 98:20-25 thru 101:1-11. March 11, Plaintiffs' Exhibit 16 Court Reporter's Record Vol. 4. This was atter Steven J. Peahollow and Penhollow Custom Homes, LLC to foreclose on I4 Balmoral. Vol Penhollow, Inc. conveyed the property to the Siddiqs on March 14, Plaintiffs' Exhibit 11 Court Reporter's Record Vol. 4.

10 property until the house was completed, Penhollow Custom Homes, LLC ransferred the property to Penhollow, Inc. who is not a builder licensed in Texas. Plaintiffs' Exhibit The foliowing portions of the statement of facts by Appellant are upon completion of their new home and their payment of the balance of the lot acquisition/construction price. If this were true, Penhollow Custom Homes would have 16. Siddiq did not take possession of the property until March 14, Court Reporter's Record Vol. 2, 55:6-25, 56:1-25 (see Hawkins' Appendix Tab la and lb). 17. There is no evidence that Penhollow Custom Homes, LLC ever filed the residential construction contract in the deed records of either Dallas County or Collin County. 18. Although the $iddiqs were told that only a builder could hold title to the Court Reporter's Record Vol. 4, Court Reporter's Record Vol. 2, 95:25 96:1-22. contradicted by Appellees as the trial court did not have to believe the testimony given by Steven Penhollow, an obviousiy interested witness or Dr. Siddiq: a. Steven Penhollow had no interest in obtaining title to the lot except on behalf of the Siddiqs. If this were rcue, Penhollow Custom Homes would have taken title to the lot as "trustee". This fact is also immaterial as the intention of Steve Penhollow does not transform into an equitable title without payment of the consideration and possession. b. Penhollow Custom Homes, LLC would take title to the lot for the Siddiqs and hold it during construction and then would transfor legal title to the $iddiqs of the taken tide to the lot as "trustee". This fact is also immaterial as the intention of Steve BRIEF OF THE APPELLEES 5

11 g. There is no also immaterial as Penhollow does not transform into an equitable title without payment of the consideration and possession. c. Steve Penhollow's testimony that as far he was concerned the Siddiqs were going to be listed as owners of the property. This fact is the intention of Steve Penhollow does not transform into an equitable title without payment of the consideration and possession. d. Dr. Siddiq's understanding that the initial $100,000 he would pay would go to the purchase of the lot. Since he did not pay $100,000 prior to the purchase of the lot, the initial $100,000 could not go to purchase the lot. Plaintiffs' Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins Appendix Tab 2a). e. The residential construction contract used by Penhollow Custom Homes was the form he used when his client owned the lot. Court Reporter's Record Vol. 2, 102:1-11. The residential construction contract, Plaintiffs' Exhibit 3, Court Reporter's Record Vol. 4, contains no conveyaane language. f. Dr. Siddiq was told before closing that he had to purchase the property from Penhollow, Inc. due to construction finance issues. Court Reporter's Record Vol. 2, 46: formal assignment of the Residential Construction Contract to Penhollow, Inc. Plaintiffs' Exhibit 3, Court Reporter's Record Vol. 4. h. John Penhollow provided a false affidavit of debts and liens, Plaintiff's Exhibit 15 Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2c), because he did not reference the abstract of judgment which he knew about. Plaintiffs' BRIEF OF THE APPELLEES 6

12 18, 2006 and was not deposited until December 27, Plaintiffs' Exhibit 4, Court SUPPORTING THE FINDINGS OF FACT AND CONCLUSIONS EVIDENCE LAW THAT SIDDIQS CHALLENGE OF Reporter's Record Vol. 4 (for Exhibits 18 and I9 see Hawkins' Appendix Tab 2d and 2e). See also the testimony of Richard Frasco, Court Reporter's Record Vol. 3, 40:11-24 County and as of June 15, 2007 as to Dallas County a valid judgment lien on 14 Appendix Tab lc). The testimony of Dr. Siddiq, Court Reporter's Record Vol. 2, 55:6-25, 56:1-25 (no possession) (see Hawkins' Appendix Tab la and lb) Plaintiffs' Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2a). (no payment of full Exhibit 22, Court Reporter's Record Vol. 4, Court Reporter's Record Vol. 2, 97:9-25; 98:1-16. i. The Chronology in Siddiqs' Appendix is misleading in stating that all payments were made on December 15, The $60,000 check was dated December Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2a). Conclusion of Law No. 1 The abstracts of judgment were properly filed and recorded in Collin County and Dallas County, Texas. Plaintiffs' Exhibits 18, 19, 20 and 21 Court to 49:2 (see Hawkins' Appendix Tab lc). Conclusion of Law No. 2: The abstracts ofjudgment were as of June I2, 2007 in Collin Balmoral. Plaintiffs' Exhibits 18, 19, 20 and 21 Court Reporter's Record Vol. 4 (for Exhibits 18 and 19 see Hawkins' Appendix Tab 2d and 2e). See also the testimony of Richard Frasco, Court Reporter's Record Vol. 3, 40:11-24 to 49:2 (see Hawkins' purchase price). BRIEF OF THE APPELLEES 7

13 Exhibits 18, 19, 20 and 21 Court Reporter's Record Vol. 4 (for Exhibits 18 and 19 see Reporter's Record Vol. 3, 40:11-24 to 49:2 (see Hawkins' Appendix Tab le). qqae 55:6-25, 56:1-25 (see Hawkins' Appendix Tab la and lb) (no possession). Plaintiffs' Exhibit 4, Court Reporter's Record Frasco, Court Reporter's Record Vol. 3, 40:11-24 to 49:2 (see Hawkins' Appendix Tab 55:6-25, 56:1-25 (see Hawkins' Appendix Tab la and lb) (no possession). Plaintiffs' Conclusion of Law No. 3: The abstracts of judgment were as of March 14, 2008 in Collin County and Dallas County a valid judgment lien on 14 Balmoral. Plaintiffs' Hawkins' Appendix Tab 2d and 2e). See also the testimony of Richard Frasco, Court testimony of Dr. Siddiq, Court Reporter's Record Vol. 2, Vol. 4 (see Hawkins' Appendix Tab 2a). (no payment of full purchase price). Conclusion of Law No. 4: The abstracts of judgment gave notice to Penhollow, Inc. and the Siddiqs of the judgment lien. Plaintiffs' Exhibits i8 and 19, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2d and 2@ See also the testimony of Richard lc). Conclusion of Law No. 7: The Siddiqs were not good faith purchasers for value from Penhollow, Inc. Plaintiffs' Exhibits 18 and 19, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2d and 2e). See also the testimony of Richard Fraseo, Court Reporter's Record Vol. 3, 40:11-24 to 49:2 (see Hawkins' Appendix Tab 1 c). Conclusion of Law No. 9: The Siddiqs did not obtain equitable title to the property before March 14, The testimony of Dr. Siddiq, Court Reporter's Record Vol. 2, Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2a). (no payment of full purchase price). BRIEF OF THE APPELLEES 8

14 Conclusion of Law No. I0: The Hawkins are entitled to foreclose the judgment lien on Reporter's Record Vol. 3, 40:11-24 to 49:2 (see Hawkins' Appendix Tab lc). The testimony of Dr. Siddiq, Court Reporter's Record Vol. 2, 55:6-25, 56:1-25 (see Hawkins' equitable or legal, placed on the property by the Siddiqs or Penhollow, Inc. or Penhollow Reporter's Record Vol. 3, 40:11-24 to 49:2 (see Hawkins' Appendix Tab lc). The 55:6-25, 56:1-25 (see Hawkins' Finding of Fact No. 20: The abstracts of judgment were notice to the Siddiqs of the judgment lien. Court Reporter's Record Vol. 3, 40:11-24 to 49:2. (Testimony of Richard I4 Balmoral. Plaintiffs' Exhibits 18 and 19, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2d and 2e). See also the testimony of Richard Frssco, Court Appendix Tab la and lb) (no possession). Plaintiffs' Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2a). (no payment of full purchase price). Conclusion of Law No. 11: The Hawkins judgment lien is superior to any liens, Custom Homes, LLC. Plaintiffs' Exhibits 18 and 19, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2d and 2e). See also the testimony of Richard Frasco, Court testimony of Dr. Siddiq, Court Reporter's Record Vol. 2, Appendix Tab la and lb) (no possession). Plaintiffs' Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2a). (no payment of full purchase price). Frasco.) (see Hawkins' Appendix Tab le) Additional Finding of Fact No. 11(1): The court finds that the Siddiqs did not take title to the property in good faith, without actual or constructive notice of the claims of the Hawkins. Plaintiffs' Exhibits 18 and 19, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2d and 2e). See also the testimony of Richard Frasco, Court Reporter's BRIEF OF THE APPELLEES 9

15 55:6-25, 56:1-25 (see Hawkins' Appendix Tab possession). Plaintiffs' Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins' parties reached the agreement. The testimony of Dr. Siddiq, Court Reporter's Record requires the trier of fact to believe the tes6mony of Steve Penhollow and Dr. Siddiq. The Record Vol. 3, 40:11-24 to 49:2 (see Hawkins' Appendix Tab lc). The testimony of Dr. Siddiq, Court Reporter's Record Vol. 2, la and lb) (no possession). Plaintiffs' Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2a). (no payment of full purchase price). Additional Finding of Fact No. 140): The court finds that the agreement between Penhollow Custom Homes, LLC and the Siddiqs reached on or before December 15, 2006 was not such that the Siddiqs acquired an equitable title or right in the property at the time the parties reached the agreement. The testimony of Dr. Siddiq, Court Reporter's Record Vol. 2, 55:6-25, 56:1-25 (see Hawkins' Appendix Tab la and lb) (no Appendix Tab 2a). (no payment of full purchase price). Additional Finding of Fact No. 14(i): The court finds that the agreement between Penhollow Custom Homes, LLC and the Siddiqs reached on or about December 15, 2006 did not convey an equitable tire or right in the property to the Siddiqs at the time the Vol. 2, 55:6-25, 56:1-25 (see Hawkins' Appendix Tab la and lb) (no possession). Plaintiffs' Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins' Appendix Tab 2a). (no payment of full purchase price). Additional Finding of Fact No. 18(t'): The court finds that the agreement between Penhollow Custom Homes, LLC and the Siddiqs reached on or before December 15, 2006 was not such that title to the property was held in trust for the Siddiqs. This finding BRIEF OF THE APPELLEES 10

16 trial court as the judge of the credibility of the parties could disregard the testimony. Even $234,637.60) or 11% ($100,000 divided by the final purchase price of the property. LLC did not agree to hold record tire for the Siddiqs until the Siddiqs' construction project was completed and closed, at which time record title would be transferred to the Siddiqs. This finding requires the trier of fact to believe the testimony of Steve could disregard the testimony. Also, even if the agreement was reached, Siddiq had no equitable title because there was no possession and no full payment of the consideration. Court Reporter's Record Vol. 2, 55:6-25, 56:1-25 (see Hawkins' Appendix Tab la and lb) (no possession). Plaintiffs' Exhibit 4, Court Reporter's Record Vol. 4 (see Hawkins' BRIEF OF THE APPELLEES 11 if the trial Court was incon'ect, Siddiq could only obtain a percentage of the title for which he actually paid on or before December i5, This amount was only $40,000. His percentage is at most 17% (40,000 divided by the purchase price of the lot of Either way, Siddiq did not have 100% of the equitable rifle. Additional Finding of Fact No. 18(g): The court finds that Penhollow Custom Homes, Penhollow and Dr. Siddiq. The trial court as the judge of the credibility of the parties Appendix Tab 2a). (no payment of full purchase price). SUMMARY OF THE ARGUMENT The well settled Texas law only protects the holder of an equitable interest if the holder pays the consideration for the real property and takes possession of it. Without these two facts, there can be no equitable title. The record establishes that the Siddiqs did

17 purchase of the lot with an additional $60,000 paid later after the purchase of the lot to Possession gives notice of the equitable title. Without the notice, there can be no equitable title. Also, the Texas legislature in 1995 passed the Executory Contract for apply, no longer are good Iaw. The Plaintiffs did not meet their heavy burden of proof to establish either a resulting or parol trust. Again, the only evidence is that the Siddiqs paid $32,000 or at not pay the consideration for the property. At most Siddiq paid $40,000 towards the construct the improvements. Siddiq did not take possession until March I4, All of the cases cited by Plaintiffs require both payment of the consideration and possession. Conveyance Statute in the Texas Property Code which mandated that contracts for deed for residential homesteads be recorded. The property was going to be the Siddiqs' homestead and as such, the contract for deed, which the residential construction contract between the parties is at best, had to be recorded. Since there is a requirement that this type of contract be recorded, the earlier cases stating that the recording statutes do not most $40,000 for the real property with an additional $60,000 paid towards construction of the home. It was noted by Plaintiffs in their own argument, since the Siddiqs did not pay the entire purchase price, they are only entitled to their percentage as a beneficiary of any resulting mast. This does not invalidate the judgment lien that was flied by the Hawkins. At most, it only results in the Siddiqs having a 17% or 11% interest in the property. The Plaintiffs also contend, against well settled law by this Court that the abstract of judgment was improperly indexed. As this Court has held in Murray vs. Cadle BRIEF OF THE APPELLEES 12

18 McBryde & Company vs. Heyland, 74 S.W.3d 906 (Tex. App. Dallas 2002, review denied); these abstracts of judgment were properly recorded and were notice to the world credibility of the witnesses and this Court can not substitute its judgment to reach a credibility of the witnesses is taken into consideration. There was evidence that 1, Only an approved builder could hold title to the property and then transferring the property to a non-builder, Penhollow, Inc. Court Reporter's Record Vol. 2, 95:25, 96:1-22. Company, 257 S.W.3d 291 (Tex. App. Dallas 2008, review denied) and in Hoffiman of the judgment lien. Since the abstracts ofjudgrnent were properly filed, theywere notice to the world and were in the chain of title. This Court must affirm the trial court's judgment including the attomey's fees awarded to the Hawkins. ARGUMENT A. STANDARD OF REVIEW: Hawkins agree with the legal standards set forth in the Siddiq brief for the standard of review. However, the trial court as the trier of fact is the judge of the different conclusion. Judge Fry resolved the factual issues that support the judgment for the Hawkins and made no factual findings contrary to the undisputed evidence, if the discredited and impeached both of the Penhollows who testified and Dr. Siddiq. Steve Penhollow's testimony that discredited his truthfulness is: BRIEF OF THE APPELLEES 13

19 purchase the lot, but only used $I2,000 for the earnest money and had only an additional $28,000 available on the day of closing. Court Reporter's Record Vol. 2, 98:17-25, 99:1-25, 100:1-25, 101:1-25. Reporter's Record Vol. 4, Plaintiffs' Exhibit 3. Steve Penhollow's inability to answer a Reporter's Record Vol. 2, 110:17-20, 11 I: 1-8 2, 116:20-25, 117: Steve Penhollow testified that John Penhollow approved Plaintiff's Exhibit 22 but John Penhollow was unsure of it in his deposition testimony. Court Reporter's Record Vol. 2, 96:23-25, 97:1-i9. Vol. 3, Penhollow Custom Homes used $100,000 of the Siddiq's money to 4. Steve Penhollow has other unpaid judgments against him. Court Reporter's Record Vol. 2, 104:1-4 Court Reporter's Record Voi. 4, Defendant's Exhibit 4, 5. The Residential Construction Conlract does not say that the $I00,000 goes to purchase the lot. Court Reporter's Record Vol. 2, 105:16-25, 106:I-17. Court question forthrightly casts doubt on his veracity. 6. Steve Penhollow did not inform the title company of the judgment. Court 7. The property was transferred to Penhollow, Inc. after the Hawkins garnished the bank accounts of Penhollow Custom Homes. Court Reporter's Record VoI. 8. Steve Penhollow testified that the transfer of the property to Penhollow Inc. was handled by a title company. Court Reporter's Record Voi. 2, 1 i2: i5-18. His father, John Penhollow, testified that there was no title company involved. Court Reporter's Record Vol. 3, 33:11-25, p.34 I-3, BRIEF OF THE APPELLEES 14

20 visited the property and he and his wife went out once or twice a (see Hawkins' Appendix Tab 2c), when he said he was 2008, Plaintiff's Exhibit 22, Court Reporter's Record Vol. 4. Court Reporter's Record Vol. 3, 34:10-25, 35:1-25, 36:1-17. John Penhollow and Steve Penhollow's testimony so REPLY TO APPELLANT'S ISSUE NO. 1: THE SIDDIQS DID NOT B. AN EQUITABLE TITLE OR RIGHT TO THE PROPERTY. HAVE prior to the filing of the abstracts of judgment by Hawkins. The cases cited by the 9. Dr. Siddiq testified at trial that every weekend he and his wife and children week. Court Reporter's Record Vol. 2, 42: But in his deposition he said mostly his wife went out. Court Reporter's Record Vol. 2, 55:10-25, 56:1-20 (see Hawkins' Appendix Tab la and lb). 10. John Penhollow lied in Paragraph 3g of his affidavit, Plaintiff's Exhibit 15, Court Reporter's Record VoI. 4 unaware of any adverse claim against the property. Court Reporter's Record Vol. 2, 94:22-25; 95:i-3; Plaintiff's Exhibit 22 Court Reporter's Record Vol. 4. (Steve Penhollow testifies that his father was aware of the lien.) This alone is enough for the trial court to discredit anything said by either Penhollow. 11. John Penhollow also contradicted Steve Penhollow when he testified that Steve Hunnicutt was not his lawyer and he did not agree with the letter sent on March 5, conflict that the trial court did not have to believe anything that either one of them said. Equitable title requires possession and payment of the consideration. The Siddiqs did not take possession of the property and did not pay the consideration for the property Siddiqs all have a similar fact pattern where the person claiming the equitable title paid BRIEF OF THE APPELLEES 15

21 Blankenship vs. Douglas, 26 Tex. 225 (Tex. 1862) concerns James H. Mullins recovery of a judgment against John J. Blard(enship in the fall term of court of On November 7, 1856 John J. Blankenship executed a deed for the lot in controversy to purchased the property from Mullins in the month of September I857. Douglas and Herring sued David Blankenship for the property. The evidence showed that the lot was purchased by John J. Blankenship for David Blankenship with the property and funds of the consideration and took possession of the property prior to the recording of the abstract of judgment. David Blankenship which was not recorded until January 16, The execution issued on December 15, 1857 and was levied on January 13, The lot was sold on March 3, 1857 when Mullins purchased the property at an execution sale. Douglas and Herring David Blankenship. John J. Blankenship stayed in possession of the property until the judgment in 1856 was rendered. There was some slight evidence of acts of ownership over the property by David Blankenship while in the possession of John J. Blankenship. The court noted that this evidence was intended for the purpose of showing possession by David Blankenship which amounts to reasonable information to Mullins of David Blankenship's claim to the property. The Texas Supreme Court held that possession to be equivalent to registration or to amount to actual notice or reasonable information of the claim of the party in possession must be open and visible, or at the least, must not be of such a character as is calculated to deceive the public. The verdict was reversed based on the fact issue of whether David Blankenship's possession was open and obvious BRIEF OF THE APPELLEES 16

22 Siddiqs had no possession of the property until March 14, 2008 when they closed opinion at Darr vs. Johnson, 257 S.W. 682 (Tex. Civ. App.- E1 Paso 1923 rev'd 272 S.W. Lusk vs. Parmer, 114 S.W.2d 677 (Tex. Civ. App. Amarillo 1938) was an argument about whether property acquired during marriage could be held as the wife's property by a deed dated December 29, After the Parmers took possession of the on the sale of the house. There was no notice to Hawkins of Siddiqs claim because there was no open and visible possession by Siddiq. Siddiq did not pay the consideration until March I4, In Johnson vs. Darr, 272 S.W (Tex. 1925) a decision of a special Supreme Court of Texas referred to the facts of the case that were found in the civil appeals 1098 Tex. 1925). The Woodman of the World transferred the property to F. P. Jones in trust for the Woodman of the World on August 24, The Woodman of the World continued in possession of the property and were still in possession at the time the execution was issued on December 18, The court found that because a nominal consideration was paid for the transfer to F. P. Jones and he held it in trust and that the Woodman of the World continued in possession that a judgment against F. P. Jones did not entitle the holder of the judgment to foreclose on that property. The Siddiqs did not occupy nor have possession of the property until March I4, They did not pay for the property until March 14, separate propeffo]. The wife, Pauline Parmer, thought the property was her separate land and on July 1, I932 Pauline paid the vendor's lien notes with funds of her separate estate and secured a release of said notes on the lien. The abstract ofjudgment was not BRIEF OF THE APPELLEES 17

23 filed until August 10, The judgment lien holder, Lusk, did not seek to enforce the lien against the land until December 20, Pauline Parmer's equitable fights were judgment was filed. Likewise in this case, the Siddiqs equitable fight did not occur until they took possession and paid for the property on March 14, Jensen vs. Bryson, 614 S.W.2d 930 (Tex. App. Amarillo 1981) concerned another contract for deed. Mrs. Bryson took possession of the property in July 1979 pursuant to a contract with the owner, Lomax. She continued in possession and fully performed her obligations under the written contract not later than December 10, I979 but Lomax could not be located to execute the deed he was contractually bound to of judgment and levied execution. Subsequent to the levy, Lomax was located and executed a warranty deed to Bryson. The Amarillo Court of Appeals held that because Mrs. Bryson fully performed under the contract before Jensen's judgment lien was recorded, she became vested with an equitable title to the realty superior to that of lien Mrs. Bryson was in possession of the premises which imparted notice of the Once again the Siddiqs had not paid for the property until March 14, 2008 and did BRIEF OF THE APPELLEES 18 fixed by her payment of the consideration and her possession long before the abstract of furnish. In March 1980 Jensen obtained a judgment against Lomax and filed the abstract Lomax's legal title. The court also noted that prior to Mr. Jensen recording his judgment equitable title under which she held the realty. not take possession until March 14, The Siddiqs had no equitable title prior to that time.

24 November 17, 1980 to purchase property in Hockley County. Once again it was a Bank/Levelland obtained a judgment against the former owner, Alford, and filed an 1, Once again, the Court noted that when the Rensendezes completed payment of App. Fort Worth 1992) has similar facts. Jones purchased two tracts of land in October Company. After the partnership requested the attorney to draft the deed, JHJ made the payments specified in the vendor's lien, paid ad valurem taxes and maintenance Texas American Bank/Levelland vs. Resendez, 706 S.W.2d 343 (Tex. App. Amarillo 1986) concerned a cuntmet entered into by Resendezes with Alford on contract for deed. Upon execution of the contract, the Resendezes moved into the house, established their home and resided there continuously. The final installment due under the eonh'aet for deed was paid on November 10, Thereafter, Texas American abstract of judgment. The deeds from Alford to the Resendezes were not filed until May the purchase price they had equitable title superior to that of Alfurd. In our case, the Siddiqs equitable title arose on March 14, 2008 long after the abstracts of judgment were filed. The Amarillo Court of Appeals in Resendez also noted that open exeinsive and visible possession of the premises is notice of the right under which it is held. There was no such open exclusive and visible possession of the premises by the Siddiqs. The Court of Appeals placed special emphasis on the fact that the Resendezes possessed and used the premises which constituted notice to the Bank sufficient to prevent it from claiming the benefit of the recording statute. Park Central Bank of Dallas vs. JHJ Investments Company, 835 S.W.2d 813 (Tex The property was supposed to be transferred from Jones to JHJ Investments BRIEF OF THE APPELLEES 19

25 expenses. $1-IJ paid off the lien to the seller. In 1988 after the lien had been paid off the taking possession, obtained equitable title to the property by virtue of its paying its 14, The next case cited by Siddiqs, Gaona vs. Rachael orally conveyed the property to Gaona on Gaona made an initial payment of $5,000 and subsequent payments on Gaona the amount of the purchase price remaining unpaid when the lien arose; on App. Fort Worth 2001, review denied) posed a similar fact pa ern. In 1981 Michael Bank obtained a judgment against Jones, filed an abstract of judgment and requested the sheriff to the sell the property that was still in Jones name but was supposed to have transferred to JHJ. Once again the Court found that JHJ by paying the purchase price and consideration and taking possession. Once again the Siddiqs did not pay for the property or take possession until March Gonzalez, 997 S.W.2d 784 (Tex. App. Austin 1999, no pet.) had similar facts. Rudolpho Gonzalez, obtained a judgment against Rachael Gonzalez in December January 21, I995. the terms agreed to between them. In June 1995 Rudolpho recorded the abstract of judgment. In April 1996 Rachael executed the Gaona warranty deed to the property which was recorded. The Court held that "Rudolpho's lien entitled him to receive from Gaona's full payment of the purchase price, R.udolpho would be required to convey legal title to the land to Gaona." 997 S.W.2d at 787. This is the exact fact scenario as io this case. The Siddiqs should have paid the Hawkins and the Hawkins would have conveyed the legal title to Dr. Siddiq. The last case cited by Siddiq, Cadle Company vs. Harvey, 46 S.W.3d 282 (Tex. BRIEF OF THE APPELLEES 20

26 Kelly. The Court noted that the property was Kelly's homestead and the judgment lien Harvey along with an option to purchase the property and they executed an eamest Harvey took possession of the property at the this was a contract for sale and not an option contract. There was no earnest money or security deposit under the lease and no mandatory obligation to accept a stated sum as liquidated damages. Harvey took immediate possession and assumed all the burdens of ownership. The court held that a purchaser under an executory contract to convey real property who goes into possession of the property, obtaining all rights and obligations of any event from the date he takes possession. In Harvey, the date of the contract and the judgment was filed by the Hawkins. this case It was Kelly purchased a home from Harvey. In October 1988 a judgment was obtained against when filed did not attach to the property. In April 1991, Kelly leased the property to money contract for the sale of the property. beginning of the lease and made all payments due under the lease. The court found that ownership in the property is vested with equitable title from the date of the contract or in date of possession were the same. It is the possession and payment which gives rise to the equitable title. This is the only case that relates the title back to the contract, but it also requires possession to do so. The "relation back" theory does not apply in th since the Siddiqs did not have possession on December or when the abstract of Tex. Prop. Code Et Seq. Has Changed the Law The Siddiqs completely ignore a change in the law that occurred with the passage of the executory contract for conveyance subchapter of the Texas Property Code. added to the Property Code to prevent abuses of contracts for deed. As noted in Section BRIEF OF THE APPELLEES 21

27 Record Vol. 4 Plaintiffs' Exhibit No. 2 (see Hawkins' Appendix Tab 2b). There is no provisions in the Tex. Prop. Code restricting the statute to certain counties xvas The in See Disposition Table from West Property Code Pamphlet 2008 Edition reproduced in deleted Appellees' Appendix Tab 4. BRIEF OF THE APPELLEES 22 1(4) of the enrolled version of Senate Bill 336, 74 th Legislature, Regular Session (see Hawkins' Appendix Tab 5): 4) statutory law in this state does not ensure that:... (B) the contract is recorded to notify subsequent creditors of the purchaser's interest in the property; See Tab 5, Appellee's Appendix. The law was enacted to prevent the situation the Siddiqs find themselves in. Since 1995 all executory contracts for homesteads must be recorded. Tex. Prop. Code 5.076(a) (see Hawkins' Appendix Tab. 4b) formerly Tex. Prop. Code Because the state legislature has mandated recording of executory contracts for residential homesteads, the failure to record the contract provides NO equitable title at all. The prior cases holding that the recording statutes do not apply, can not stand in face of the Texas Legislature's act that executory contracts for homesteads must be recorded. Siddiqs Did Not Pay Nor Take Possession of the Property The March 14, 2008 Until The evidence at trial showed that although the Siddiqs paid Penhollow $20,000 in September, he only used $12,000 of that as a down payment on the lot. Court Reporter's evidence of what happened to the additional $8,000. Al er that Dr. Siddiq paid the Penhollows $20,000 on December 15, 2006 which evidently was used by the Penhollows to purchase the lot since it was by cashier's check and that was the date of closing of the purchase of the lot. Court Reporter's Record VoI. 4, Plaintiffs' Exhibit No. 6. However,

28 money could not have been used to acquire the property. The building permit was not Reporter's Record VoI. 2, 78:13-25, 79:I-6. What he did with the money is unknown. paid no taxes. The Penhollows paid the taxes out of the closing on March 14, Court occasionally, but exercised no ownership rights. Court Reporter's Record Vol. 2, 55:10- equitable rifle. The fact that the Penhollows and Dr. Siddiq testified that it was equitable title. Possession and payment convey equitable title. The residential contract the additional $60,000 was paid three days after the closing and not deposited until December 27, Court Reporter's Record Vol. 4 Plaintiff's Exhibit 7. Therefore, this issued until February 13, Court Reporter's Record Vol. 4 Defendant's Exhibit 5. Penhollow also indicated that very little work was done until February Court What is clear from the evidence is it did not go into this property. The Siddiqs paid no other money to the Penhollows until the closing on March 14, They did not take possession of the property, they exercised no ownership rights, Reporter's Record VoI. 3, 11:22-25, I2:I-10. The Siddiqs at most went by the property 25, 56:1-20 (see Hawkins' Appendix Tab la and lb). This is not the type of equitable title, even if there is an equitable title available after the passage of the Tex. Prop. Code (see Hawkins' Appendix Tab 4b) that gives rise to notice of their claim. They did not pay for the property and they did not possess the property. Therefore, they had no their intent to convey the property, does not mean that the court had to believe them. The trial judge was the trier of fact and he made the determination of credibility. Intent does not convey signed by the Siddiqs with Penhollow Custom Homes has no conveyance language in it. BRIEF OF THE APPELLEES 23

29 Therefore, it cannot be a conveyance document. The Siddiqs did not purchase the property from Penhollow Custom Homes, but purchased it from Penhollow, Inc., who had acquired it from Penhollow Custom Homes as even Siddiqs' lawyer indicates, was a suspicious transaction. It occurced 12 days after the Hawkins garnished the bank Hawkins, Penhollow Custom Homes and Steven Penhollow's lawful creditor. The Penhollows did not tell Dr. Siddiq about this lien. John Penhollow lied under oath in an There was insufficient evidence of a resulting or parol lxust and there was no accounts of Penhollow Custom Homes and is clearly nothing more than an attempt to remove assets from Penhollow Custom Homes. This was during the period that the Hawkins could not get a writ of execution out as the time for that had not yet expired. The Penhollows were aware of the judgment lien and were doing everything they could to prevent the funds that would be paid by Dr. Siddiq at closing to go to the affidavit to the title company that he was unaware of any adverse claim. This fact alone is enough to sustain the trial court's obvious f'mding that nothing the Penhollows said could be believed. They were willing to allow the Siddiqs to buy the property and foist their troubles off on an unsuspecting title company. REPLY TO APPELLANT'S ISSUE NO. 2: NO RESULTING TRUST C. PAROL TRUST OR unjust enrichmentofthehawkins. A resulting lr st is imposed to prevent unjust eurichment. The law is suspicious of resulting trusts, and consequently a heavy burden of proof is placed on the party attempting to establish the existence of one. Troxel v Bishop, 20I S.W.3d 290, (Tex. App Dallas 2006). Siddiqs did not meet this heavy burden, BRIEF OF THE APPELLEES 24

30 Record Vol. 4, Plaintiffs' Exhibit 2 (see Hawkins' Appendix Tab 2b). There is aiso no purchase price of the lot. $60,000 of the $100,000 was not even deposited until after closing. There is only the testimony of Steve Penhollow, an obviously interested witness only calls for a lump sum deposit and does property for Plaintiffs, the deed could have been to PenhoIIow Custom Homes, Trustee. It Homes, LLC or Plaintiffs' title insurer. because although there is evidence that Siddiq paid $20,000 to Penhollow Custom Homes, in September 2006 as a "lot deposit" only $12,000 was shown on the closing statement when Penhollow Custom Homes, LLC purchased the lot. Court Reporter's evidence that any of the money that Siddiq paid to Penhollow went to the payment of the who had no credibility with the trial court. No check from Penhollow Custom Homes to Cresswell was entered into evidence. The residential construction contract, Court Reporter's Record Vol. 4 Plaintiffs' Exhibit 3, not direct it to a specific purpose. If Penhollow Custom Homes LLC was purchasing the was not. Plaintiffs attempt to graft a resulting trust on this transaction does not meet the heavy burden of proof required. There is also no unjust enrichment as between Plaintiffs and Hawkins. As noted in Casstevens v. Smith, 269 S.W.3d 222 (Tex. App. Texarkana 2008, review denied) there is no unjust enrichment when you are exercising your legal rights. Since the abstract of judgment was properly riled, Plaintiffs were on notice of the adverse claim when they closed the purchase on March 14, Plaintiffs elaim is against Penhollow Custom A resulting tnast and/or parol trust require that the property be purchased with the funds &another. Here clearly, the most the Siddiqs put into this property was $100,000 BRIEF OF THE APPELLEES 25

31 although there is only evidence that $32,000 of it went to purchase the property. As money is purchase price, results in an interest in the property of only 11%. Assuming without agreeing that the Siddiqs put in $40,000 of a $234,000 lot price the Siddiqs only have a Penhollow, Inc. were unjustly enriched. Siddiqs of the claimed lien. noted by Williams v. Robinson, 2009 WL , 2009 Tex. App. Lexis 5982 (Tex. App. Tyler 2009, mem.op.) cited by the Siddiqs, where only a part of the purchase contributed by the person whose name does not appear on the deed, the trust claimant's ownerships extends to the proportion that the contribution bears to the total price. Assuming without agreeing that the Siddiqs put in $100,000 of a $900,000 17% interest. Therefore, there was over at least $700,000 available to pay the Hawkins duly recorded judgment lien. The Siddiqs could have paid the Hawkins their judgment, taken complete title to the property, and owed no other money to Penhollow, Inc. and/or Penhollow Custom Homes and/or Steven Penhollow. The Hawkins were not unjustly enriched and the Siddiqs should have paid the judgment. Steve Penhollow and D. REPLY TO APPELLANT'S ISSUE NOS. 3 AND 4: ISSUE NO. 3 Abstract of Jud nent was Properly Indexed. The Hawkins' abstracts of judgment were properly indexed in the real property records of Dallas County and Collin County and provided constructive notice to the Texas Property Code et. seq. governs the establishment of judgment liens. Tex. Prop. Code provides that the county clerk shall record in the real property records on the alphabetical index the name of each plaintiff in the judgment, the BRIEF OF THE APPELLEES 26

32 in the records in which the abstract is recorded. As clearly noted in Plaintiff's own evidence, the abstract of judgment was recorded in the Grantor or direct index under the Hawkins name and in the Grantee or indirect index under Penhollow Custom Homes records and that has the judgment creditor as "grantor" and the judgment debtor as "grantee" is a valid filing and gives notice of the judgment lien. Murray vs. Cadle found that the abstract of judgment in the Murray case was properly recorded and was a headings for the alphabetical index to the real property records. 257 S.W.3d at 297. name of each defendant in the judgment and the volume and page or instrument number LLC and Steven Penhollow. This Court has clearly stated that an abstract of judgment that is filed in the deed Company, 257 S.W.3d 291 at299 (Tex. App. Dallas 2008, review denied). The facts in Murray vs. Cadle Company are somewhat similar to the facts in this case. In our ease, the judgment debtor, Penhollow Custom Homes, LLC, owned property at the time an abstract of judgment was filed. In Murray vs. Cadle Company, the judgment debtor, James H. Moore III, also owned property when an abstract of judgment was filed against him. In both eases the judgment debtor then transferred the property to a related third-party who then sold the property to an unrelated third-party. In both cases the title company issued a title policy that did not disclose the judganent lien. This Court valid lien against the property. The Murrays, like the Siddiqs in this case, argued that the abstract of judgment had to be indexed by Plaintiff and Defendant and that it was indexed by grantor and grantee. This Court noted that the language of the statute does not mandate, or prohibit, particular BRIEF OF THE APPELLEES 27

33 The Murrays also argued that a judgment was indexed "backwards" by identifying the FDIC, the judgment creditor, as judgment filed in Dallas County and Collin County is incorrect. BRIEF OF THE APPELLEES 28 Since the Abstract of Judgment was properly indexed and recorded it is notice to all persons of the existence of the instrument. Tex. Prop. Code (1). Therefore, Plaintiff had notice of the abstract of judgment filed prior to his deed of March 14, 2008 that was not recorded until March 24, Plaintiffs are not good faith purchasers for value without notice of the Hawkins judgment lien. valid lien was not created because the abstract of "grantor" and Moore, the judgment debtor as "grantee". Like the Siddiqs, the Murrays coetend that this should have been flipped. Once again, however, this Court disagreed. This Court noted that neither Texas Local Government Code (b) nor Tex. Prop. Code (b) require that a county use the heading "grantor" and "grantee". The statutes just require the names of the grantors and the grantees in alphabetical order. The Plaintiffs' argument on this matter is incorcect. If it is correct then every abstract of The testimony of Richard Frasco was clear and to the point. He found the abstract of judgment by looking in the index records of both Dallas County and Collin County. He testified that it was common knowledge that both Dallas County and Collin County indexed the abstract of judgment with judgment creditor in the grantor index and the judgment debtor in the grantee index. This method of indexing has been sanctioned by this Court. The chain of title cases cited by the Siddiqs are just not on point. Since the abstract was properly indexed it was in the chain of title. This Court has previously told the

34 granted by the judgment debtor, and therefore they are not a Siddiq contends that this Court has never looked at the issue of a bonafide purchaser for value. However, in Hoffinann MeBryde & Co. vs. Heyland,74 S.W.3d 906 judgment was filed. paying full consideration for the property and taking possession of the property. Without Clerks of the counties over which it has jurisdiction that the way Dallas County County and Collin County clerks' index abstracts of judgment is appropriate. There is no way that a judgment creditor would ever be in the chain of title because the judgment is not "grantor". (Tex. App. Dallas 2002 review denied) this Court found that an abstract &judgment was properly recorded in Dallas County with the grantor being the judgment creditor and the grantee being the judgment debtor and upheld the judgment Iien against a purchaser for value. 74 S.W.3d 906 (Tex. App. Dallas 2002, review denied). Contrary to what the Siddiqs lawyer contends, there was a purchaser for value involved in Murray also. The Murrays purchased the property from Brunswick Homes after the abslract of ISSUE NO. 4 Attorney's Fees Awarded Because the Hawkins prevailed, the a oraey's fee award should be sustained. CONCLUSION The trial court properly granted judgment to the Hawkins because the abstracts of judgment were properly recorded in Dallas County and Collin County prior to the Siddiqs BRIEF OF THE APPELLEES 29

35 payment of the full consideration and possession there is no equitable title. The Texas legislature has mandated recording of contracts for deed, another reason why the Siddiqs required for establishing such trusts. Even if one was established the Siddiqs only obtained a small fraction of ownership. There were still sufficient funds to pay the BRIEF OF THE APPELLEES 30 have no equitable title. There is no parol or resulting trust because Siddiqs did not meet the heavy burden Hawkins. The abstracts of judgment were properly recorded and were in the ehain of title. This Court does not need to revisit its prior rulings about the proper recording of abstracts of judgment because this Court's ruling was eorreet. Since the Hawkins prevailed they are entitled to their attorney fees. The judgment of the al court should be affirmed.

36

37 Reporter's Record Pages: Court Vol. 2, 55:6-25 a. Reporter Exhibits Vol. 4 of 4 Exhibits: Court Exhibit 4 a. Exhibit 2 b. Exhibit 15 c. Exhibit 18 d. Exhibit 19 e. Chronology of Equitable Title Cases table from West Texas Property Code for Subchapter D. Executory Disposition for Conveyance and cun'ent Sections: Con 'act a b. Enrolled Senate Bill APPENDIX Vol. 2, 56:1-25 b. Vol. 3, 40: I 1-25 to 49:2 c. Legislature, Regular Session. BRIEF OF THE APPELLEES 32

38 FOR PLAINTIFFS: ATTORNEY James H. Cheatham Mr. NO SBOT David E. Littman Mr. NO SBOT at Law Attorneys RECORD REPORTER'S 2 OF 4 VOLUME W. Seventh Street, Suite Worth, Texas Fort FOR DEFENDANTS: ATTORNEY Robert A. Miller Mr. NO SBOT at Law Attorney Quorum Drive, Suite Texas Dallas, proceedings came on to be heard in the above-entitled and Presiding, held in Collin County, Texas: Proceedings reported by Computerized Machlne Shorthand. L. DUGGER, CSR JANET DISTRICT COURT (972) TH I 2 TRIAL COURT NO ZAKARIA AND SHAGUFTA SIDDIQ IN THE DISTRICT COURT OF 4 TEXAS vs. COLLIN COUNTY, 5 296TH JUDICIAL DISTRICT LATROY AND ANITA HAWKINS 6 7 TRIAL BEFORE THE COURT 8 DECEMBER 17, APPEARANCES: Phone: (817) Phone: (972) O 21 On the 17th day of December, 2008, the following numbered cause before the Honorable James Fry, Judge 24 25

39 writing by counsel for the occurred in open court or in chambers and were reported by me. Court Reporter Official District Court 296th County, Texas Collin Bloomdale Road 2100 L. DUGGER, CSR JANET DISTRICT COURT (972) TH THE STATE OF TEXAS ) COUNTY OF COLLIN ) 2 3 I, Janet L. Dugger, Official Court Reporter in 4 the 296th District Court of Collin County, State of for 5 and do hereby certify that the above and foregoing contains Texas, 6 true and correct transcript of all portions of evidence and a 7 other proceedings requested in 8 parties to be included in this volume of the 9 Reporter's Record, in the above-styled and numbered 10 cause, all of which 12 I further certify that this Reporter's Record of the proceedings truly and correctly reflects the exhibits, if any, offered by the respective parties. WITNESS MY OFFICIAL HAND this the 13th day of August, # O Texas McKinney, 972/ Phone:

40 Q. So did you ask him, Mr. Penhollow, if Penhollow Inc. Q. You also said that you and your family went out to Q. DO you remember when I took your testimony on Q. At that time, didn't you say that I asked you, did you go out and look at the house as it was being built with any regularity? And your answer was, yes; mostly my Isn't that what really happened, is mostly your that who was supervising the construction. So it was my wife went there, I mentioned that yes, we used to go on weekends. MR. MILLER: May I approach the witness, Your L. DUGGER, CSR JANET DISTRICT COURT (972) TH 55 A. AS I said, he said he will continue to have contract builder. 2 Penhollow Custom Homes as his 3 4 can own the property, why can't I own the property? A. No, I did not ask this question, sir. 5 6 the property frequently with your kids and looked at it during 7 8 construction. DO you remember that? A. That's correct, sir November the Ith in a deposition? 11 A. Yes, I remember that wife wife went out and looked at it? 18 A. Yeah. When you asked me, I was asking a question who was basically going day-to-day as far as the construction progress is going. When he asked me whether me and my kids Honor?

41 and yohr answer. do with who was 11th, And I want you to read my question Question: Did you go out and look at the house Now, the question before that had nothing to that was, when was the last time you saw Steve Q. And in answer to my mostly the wife and the kids out there. You didn't say There there was no picnic, sir. L. DUGGER, CSR JANET DISTRICT COURT (972) TH 56 I THE COURT: Yes, sir. want to hand you what's page 34 of your deposition of 3 November 4 Sure. 5 6 Q. On line 16 through 18. Line 16 through 18? as it was being built with any regularity? Yes. Mostly my wife Q. Okay. supervising the construction, did it? The question before is that correct? 14 Penhollow at the work site; A. If I see it again I probably right. That's correct. question in your deposition, it 17 was mostly your wife who went and everybody else went out 20 there. you Did ever have a picnic out at the 21 construction site? Q. 24 Never spent the night at the construction site? No, absolutely not.

42 SIDDIQ AND ZAKARIA SIDDIQ, SHAGUFTA BOB BELL, IN THE HAWKINS, AS CONSTABLE, CAPACITY 3, COLLIN COUNTY, PRECINCT TE S, RECORD REPORTER'S 3 OF 4 VOLUMES VOLUME TRIAL COURT CAUSE NO IN THE DISTRICT COURT Plaintiffs, COLLIN COUNTY, TEXAS VS. LATROY HAWKINS, ANITA 296TH JUDICIAL DISTRICT Defendants. REPORTER'S RECORD On the 18th day of December, 2008, the following proceedings came on to be heard in the above-entitled and numbered cause before the Honorable Judge Jim Fry, Collin County, Texas; Judge presiding, held in McKinney, Proceedings reported by machine shorthand.

43 having been SADDIQ VS. MR. MILLER: Let me see THE COURT: See if you can find your All right. Take a short recess. MR. LITTMAN: Dave Littman, I filed an has been involved with real estate in Texas. 40 HAWKINS at this point? recess witness. 4 5 (A recess taken) 6 to Mr. Frasco's anticipated testimony prior to 7 objection the 8 9 COURT: That's correct. I will overrule THE objection. i0 the FRASCO, 11 RICHARD first duly sworn, testified 12 as follows: DIRECT EY MINATION BY MR. MILLER: Q. State your name for the record A. My name is Richard Frasco, the Court basically 17 Q. Mr. Frasco, could you tell 18 what you do for a living? A. I'm an attorney, licensed in Illinois and in 19 Texas. My time in Texas began in I came here to be counsel for one of the title companies. I currently am general counsel for a licensed title insurance agency, Regency Title Company. And most of my practice Q. DO you review title searches and do title BRYANT REPORTING

44 SADDIQ VS. Q. Have you had the opportunity to review the Q. And if you were searching the title when )roperty that's involved in this case, 14 Balmoral, what agency, we're going to be making a search in a licensed 17 plant. And the difference between the plants that are 41 HAWKINS searches? A. I do. Q. Do you also teach at the Collin County Community College? A. I did that for 20 years. I ceased teaching for them January of abstracts of judgment filed by the Hawkinses in this 8 matter? 9 10 A. Yes. Ii 12 'enhollow if you were searching the title on the would you do to search for that title policy on that? A. Well, being the owner of a title insurance icensed by the Texas Department of Insurance for title 19 agencies and the county clerk's records are that title 20 plants are geographically indexed as well as indexed by office is only 21 name. Whereas the county clerk's 22 required to have alphabetical indexes, that being the 23 Grantor Index and Grantee Index. 24 To answer your question, I would have to ask if I only 25 were searching the records in a distant county that BRYANT REPORTING

45 might do something else. SADDIQ VS. notice case. This is not a negligent abstractor case or anything like that. This testimony about what a title policy somebody would do to get a title policy has nothing to do with this case. County, what would you do? A. Yes. Assuming that we know who the current owner :is, then we would search back 25 years to the root title 42 HAWKINS Grantor/Grantee that I would Index, had an alphabetical 1 2 do one thing. If I were searching it in my own plant, I 3 4 MR. CHEATHAM: Your Honor, just for the record, we have got to continue to assert our objection 5 6 to this line of questioning. This is a constructive i0 THE COURT: Overruled. Counsel, I will give ii 12 you a running objection. MR. CHF %THAM: Thank you, Your Honor BY MR. MILLER: Q. If the property was located in Collin or Dallas and we would search back looking at the Grantee, who is the current owner. We would run the Grantee Index back on the current owner, and then we would check it again in the geographical index under the lot and block and subdivision Q. Did you do that for the properties in question in this case? 25 BRY NT REPORTING

46 SADDIQ VS. A. In searching backwards, I found that there were Inc., and thereafter Penhollow, Inc., conveyed the property to someone whose name is Saddiq. So that's the Q. When you found when you did the search, what 43 HAWKINS A. I did. Q. hnd what did you find when you ran that search? 2 A. May I refer to my notes? Q. You may. 4 5 several transactions involving this property in just the 6 7 last couple of years. That on September 13th of 2007, an entity called Cresswell conveyed the property to 8 9 Penhollow Custom Homes, LLC; thereafter, Penhollow Custom Homes, LLC, conveyed the property to Penhollow, i0 12 chain of owners going back In searching the records, I find an Abstract of Judgment in favor of Troy and A ita Hawkins and against I'm sorry, Penhollow Construction Home I'm sorry, Penhollow Custom Homes, LLC, and Steven Penhollow. I llso found a canceling Affidavit in favor of Metroplex arden Design against Penhollow Custom Homes, LLC would be pulled up on your I mean, what would they show? Would they just show that there was an Abstract 23 of Judgment filed and you 24 would have to find that 25 abstract to look at it? BRYANT REPORTING

47 actually pulled up county clerk's records SADDIQ VS. Q. Do you consider the Hawkinses' Abstract of Judgment to be the chain of title in this case? province of the Court. The facts impact is given to the documents. they are recorded Q. Is it common knowledge in the title insurance and Q. Are you aware that's the custom also in Dallas 44 HAWKINS 1 A. Well, a good abstractor doesn't rely just on the indexes. I mean, we try to teach the abstractors and 2 3 examiners that they have to look at the instrument and not just look at the index. 4 5 So when I found these two items of the index, I the instrument on the screen from the 6 7 and looked at it. 8 9 i0 MR. CHEATHAM: Objection, Your Honor. It calls for purely a legal conclusion. It's the sole ii 12 to what they are. It is up to the Court 13 decide what I'll sustain the question that's THE COURT: asked BY MR. MILLER: title business that Collin County Clerk's abstract 20 files abstracts of judgment with the judgment creditor as the Grantor and the judgment debtor as the Grantee? A. That's the custom, yes County? A. It is. 25 REPORTING BRY /qt

48 SADDIQ VS. initial search through the index was a reference to an Penhollow and Penhollow Custom Homes, LLC, designated as And so there's nothing in that index, as you're looking at the index, that tells you that the 45 HAWKINS 1 MR. MILLER: I'll pass the witness, Your Honor. 2 3 CROSS-EXAMINATION CHEATHAM: 4 MR. BY 5 Q. Mr. Frasco, my name is Jim Cheatham. I represent Dr. Saddiq in this case here. You had said something in 6 get an answer I would like to 7 clarification of. 8 found in the index the Abstract You said that you 9 of Judgment and Abstract of Judgment in favor of Hawkins and against Penhollow Custom Homes and Penhollow and i0 ll Steven Penhollow. Do you recall saying that? A. I think that's what I said, yes Q. Okay. Isn't it true what you found in your 14 Abstract of Judgment that reflected Anita and Troy 16 Hawkins as Grantors designated as Grantors, and Steve Grantees? 19 A. That's probably what the index would indicate, yes Q. Okay. 22 Abstract of Judgment is in favor of the Hawkinses; isn't 23 true? 24 that 25 A. When you're looking at the index BRYANT REPORTING

49 SADDIQ VS. Q. That's all I'm asking you about is the index. Q. In front of you, you have a big binder like this. Inc., to Penhollow Custom Homes, LLC; is that correct? Q. hnd Cresswell Enterprises, Inc., is designated as Q. Isn't it true that a Grantor under Texas under understood as being the person who is conveying or Q. And the Grantee, similarly, is the person or entity who is actually receiving or the recipient of 46 HAWKINS 1 A. Yeah. When you're looking at the index, you 2 3 can't tell who the judgment is in favor of, which means ou must explore further. 4 5 it's Plaintiffs' Exhibits. If you would, I would like 6 7 to refer you to Exhibit 9, which purports to be a Deed dated December 15, 2006 from Cresswell Enterprises, 8 9 A. Yes. i0 ii Q. Is that one of the documents you found when you searched the title on this property? A. I believe it is, yes. 14 the Grantor? 15 A. Yes the title searching industry's custom and practices is transferring some real property interest to somebody 20 else? A. That's a fair statement the recipient or the beneficiary of the real property 25 REPORTING BRY LNT

50 SADDIQ VS. Judgment Index that we were talking about, if we use the customary vernacular and understanding of the Grantor to Q. You wouldn't agree with the last statement of put judgment creditor as the Grantor; is that correct? 47 HAWKINS interest that's being conveyed? A. Well, with the expectation of your use of the word "beneficiary," I would say, yes, the Grantee is the 3 person who is receiving the interest. 4 5 Q. All right. And so, in fact, then the /Ibstract of Grantee would indicate, would it not, looking at that index, that the Hawkinses are the ones who are granting 9 I0 or giving a lien in favor of the Grantees, Steve Penhollow and Penhollow Custom Homes? ii A. Well, I think I'm going to have to say, no, I would not agree with that. 14 Your Honor. MR. CHEATHAM: Pass the witness, 15 REDIRECT EXAMINATION BY MR. MILLER: counsel because in your knowledge of how Collin County and Dallas County indexes abstracts of judgment, they A. Well, that's that's true. But it is also because many documents that are in the public records don't designate one person as the Grantor and the other )erson as the Grantee And I don't find in the statutes any requirement BRYANT REPORTING

51 Q. And you SADDIQ VS. Hawkinses were ever shown to be the o -ners of any 48 HAWKINS 1 that the clerk index those documents in any particular way. They're simply told to have an alphabetical index. 2 3 Q. Does the Collin County Clerk have an alphabetical index? 4 A. Yes. 5 6 Does the Dallas County Clerk have an alphabetical Q. 7 index? 8 A. Yes. Q. Were you able to find the abstracts of judgment 9 10 at issue in this case in those alphabetical indexes? A. Yes. ii 12 Q. You did that besides what you did with the title plan, you looked at the on-line records also? A. I did. found the Abstract of Judgment? A. Yes. index? 17 Q. And the alphabetical 18 A. Yes. MILLER: 19 MR. Pass the witness. RECROSS-EXAMINATION BY MR. CHEATHAM: Q. The Hawkinses are you aware of whether the property interest in this property when you did your 25 chain of title search? BRYANT REPORTING

52 SADDIQ VS. recipient of a Deed delivered to them conveying an interest in the title to the property, I don't find any index, you do that by name, do you not? question that Q. And you Homes, LLC, is think the answer to yes. designated as Grantee. And it shows an 49 HAWKINS 1 A. If you're asking whether they were ever the 2 3 deeds. 4 5 Q. And so if you were going to find this abstract in the records if you didn't know the Hawkinses existed, 6 7 the only way you find that is by doing your alphabetical name search relative to Penhollow or Steve Penhollow or 8 9 Penhollow Custom Homes? A. Well, the answer is yes. Whether you search them i0 ii as if you were going to do a title search and you searched Penhollow, you would find the Abstract of Judgment. Q. When you're doing a search of the alphabetical A. Yes Q. And by searching the name Penhollow Custom Homes, LLC or Steven Penhollow, you would find the index that 18 described previously in 19 you just response to an earlier I asked you, right? 20 is, A. Well, I that find the index that that said listed that reflected that the Hawkinses are designated as the 23 and Steven Penhollow and Penhollow Custom Grantors BRYANT REPORTING

53 STATE OF TEXAS THE OF COLLIN COUNTY SADDIQ VS. contains a true and correct portions of evidence and other above-styled and in open court or transcription of Reporter's Record, in the requested in in chambers and were reported by me. Bryant, Texas CSR 5772 Kelly Date: 12/31/10 Expiration Linn Drive 4190 Texas Paris, 80 HAWKINS REPORTER'S CERTIFICATE I, Kelly Bryant, Deputy Official Court Reporter in 4 and for the 296th District Court 5 of Collin County, State 6 that the above and foregoing of Texas, do hereby certify all 7 8 proceedings writing by 9 counsel for the parties to be included in this volume of the I0 numbered cause, all of which occurred II I further certify that this Reporter's Record of the proceedings truly and correctly reflects the exhibits, if any, admitted by the respective parties. WITNESS MY OFFICIAL HAND this the day of Official Court Reporter Deputy District Court 296th BRYANT REPORTING

54 REPORTER'S RECORD VOLUME 4 OF 4 TRIAL COURT NO COURT OF APPEALS NO CV IN THE DISTRICT COURT OF ZAKARIA AND SHAGUFTA SIDDIQ VS. COLLIN COUNTY, TEXAS JUDICIAL DISTRICT LATROY AND ANITA HAWKINS 296TH EXHIBITS

55 PLAINTIFFS' Description Offered Admitted Volume NO. Lot deposit and retainer I receipt Lot closing settlement statement Siddiq residential contract construction $80,000 lot deposit and receipt contract $20,000 lot deposit check Siddiq to Penhollow copy $20,000 lot payment check Siddiq to Chase Bank copy $60,000 lot payment check Siddiq to Penhollow copy Residential construction cover letter contract Special Warranty Deed Enterprises, Inc. Cresswell Deed Penhollow Custom to Penhollow, Inc. Homes Deed Penhollow, Inc. to Siddiq Deed of trust American Finance Deed of trust Bank of Whittier John Penhollow affidavit to d bt l n L. DUGGER, CSR JANET DISTRICT COURT (972) TH INDEX EXHIBIT I Homes 0 Custom Custom Homes Penhollow 17 to Title commitment

56 PLAINTIFFS' DescriDtion Offered Admitted Volume No. "Contract of sale" Inc. To Siddiq Penhollow, 17 Closing statement Abstract of Judgment County Collin Abstract of Judgment County Dallas Ben Knittel Affidavit and printout of name computer Ben Knittel Affidavit and printout of computer Letter from Steve Hunnicutt Robert Miller regarding to 23 Resume DEFENDANTS' DeseriDtion Offered Admitted Volume No. 1 Notice of Constable Sale Penhollow Custom Homes, Welcome to New Home LLC Penhollow Custom Homes for obtaining procedure 5 Building Permit Application L. DUGGER, CSR JANET DISTRICT COURT (972) TN EXHIBIT INDEX (contd.) I search in Collin County 10 name II search in Dallas County lien dispute service warranty 21 4 Kim Abstract of Judgment Building Inspection Department Building Inspection 8 8 2

57 Deposit and ShaguRa Siddiq Zakaria 4 Bloc& C Hills of Breckeawldgc Lot Balmora/, Ricl dso. TX PENHOLLOW HOMES CUSTOM is to acknowledge receipt of a $20,000 cashier's check This a deposit toward the lot as and a $60,000 check for deposit on lot and contract closing above propert7. on proxh_de by: Custo mer e E t December 15, 2006 Collin County Deposit received by: Kepresentative Date: PenJaollow Custom l-lomes PLAINTIFFS' EXItIBIT 4

58 Date: Posting #: Sequence #: ' ccount Transit: 11 ] ouling #: $ Amount #: Check/Serial #: 201 Babk Code: Tran 0 IRD: P ltemtype: BOFD: Center: N/A Cost Seq Number: NIA Teller Date: N/A Processing Page /2008 ofl Teller Number: N/A ,'' -i SIDDIQ2

59 Dale: Posting #: Sequence #: eount Transit: Routing #: $ Aznount #: CheckJScrial #: 201 Bank Code: Tran 0 1RD: P ItemType: Page of 1 hltps://instantlmage.bankone.netjstar/action/print.do?oflreq]d= el /3]/2008 BOFD: 11 i Cost Center: N/A Teller Number: ]q/a SIDDIQ3

60 Dale: Posling fl: Sequence ouling Transit: #: $ Amount #: Check/Serial #: 201 Bank Code: Tran 0 IRD: BOFD: Center: N/A Cost Seq Number:N/A Teller Date: N/A Processing Page ] ] 7e /28/2008 ofl Account #: ]temtype: P Teller Number: NIA SHAGUFTh SIDDIQ1

61 EXHIBIT 2

62 '07.