Court of Appeals Ninth District of Texas at Beaumont

Transcription

1 In The Court of Appeals Ninth District of Texas at Beaumont NO CV ROD SCHLOTTE, AS AGENT AND/OR ASSIGNEE OF LINDA PARRAS A/K/A LINDA PARRAS KNIGHT, Appellant V. OPTION ONE MORTGAGE CORPORATION, AS SERVICING AGENT FOR WELLS FARGO BANK, N.A., TRUSTEE FOR ABFC 2004-OPT4 TRUST, ABFC ASSET-BACKED CERTIFICATES, SERIES 2004-OPT4, Appellee On Appeal from the 284th District Court Montgomery County, Texas Trial Cause No CV MEMORANDUM OPINION Appellant Rod Schlotte brought suit against Option One Mortgage Corporation in its capacity as servicing agent for Wells Fargo Bank, N.A., trustee for ABFC 2004-OPT4 Trust, ABFC Asset-Backed Certificates, Series 2004-OPT4 ( Option One ). Schlotte s original petition alleged Option One wrongfully foreclosed on his property and violated the Texas Deceptive Trade Practices Act ( DTPA ). Schlotte amended his petition to include a claim for negligence. Option One moved for summary judgment on six 1

2 grounds: (1) Schlotte lacked standing to sue for wrongful foreclosure; (2) Schlotte had no evidence to support his wrongful foreclosure claim; (3) Schlotte had no evidence to support the elements of his breach of contract claim; (4) Schlotte, as a matter of law, is not a consumer under the DTPA; (5) Schlotte had no evidence that Option One committed an intentional violation of the DTPA with actual awareness to support a claim for exemplary damages; and (6) Schlotte had no evidence of any harm or irreparable injury to support his request for injunctive relief. The trial court granted summary judgment on the basis that there is no evidence sufficient to create a fact issue with regard to each of Schlotte s claims. While Schlotte alleges he brought suit only as the agent and assignee of Linda Paras, 1 and not on his own behalf, the actual body of his petition speaks otherwise. Schlotte clearly seeks damages for his own losses. Paras, who is not a party to this cause, owned real property located at Ehlers Road in Conroe, Montgomery County, Texas. Option One loaned Paras $50,000 and secured the loan note with a deed of trust signed by Paras for the Ehlers Road property. When Paras became significantly behind in her payments, Option One initiated suit to seek a non-judicial foreclosure sale. The court granted Option One permission to proceed with the sale. On September 4, 2007, Paras sent a handwritten letter to Option One s Customer Resolution Department that gave Option One permission to provide information on her 1 Since the loan documents contained in the record, as well as the purported signatures of the debtor, indicate the debtor s name is spelled Paras, we utilize this spelling of the debtor s name throughout this opinion. 2

3 loan to Schlotte on her behalf. At the bottom of the letter, there is a handwritten note that states, He will be calling for me on Sept 10, for current reinstatement [amount]. He will bring current [and] make payment on loan. A letter dated November 16, 2007, from Schlotte to Paras, reflects Schlotte s understanding that Paras agreed in September to authorize Schlotte to obtain the property s loan information for the purpose of purchasing... the property. The letter states that to complete the purchase transaction Paras must sign and have notarized, and return to Schlotte, a power of attorney, a quit claim deed, an escrow account release, and an assignment of insurance. The letter notes that as payment for the property, Schlotte paid Paras $2,000 and delivered to her a go-cart. The letter further indicates that Schlotte still owed Paras $500 to fulfill their purchase agreement. In November 2007, Paras executed a warranty deed, an assignment of the escrow account that contained Option One s mortgage loan, an assignment of an insurance policy, and a power of attorney appointing Schlotte attorney for all matters pertaining to the property. There is nothing in the record to show that any of these documents were recorded in the real property records of Montgomery County, Texas. Despite the purported execution of the documents assigning her interest in the property to Schlotte, on December 4, 2007, Paras executed a forbearance agreement with Option One for the Ehlers Road property. After Paras and Option One entered into the forbearance agreement, Schlotte made timely payments on the mortgage until April. When Option One did not receive timely payment in April, it proceeded with the 3

4 foreclosure. Schlotte testified that he did not receive notice of the foreclosure. The summary judgment record contains an Affidavit of Sending Notice of Sale, which indicates that notice was sent by certified mail to Paras, at her most recent address, at least 21 days before the date of the foreclosure sale. The foreclosure sale took place June 3, 2008, whereby the property was purchased for $62, Schlotte testified that he was unaware of the foreclosure sale until June 26, 2008, when he was served with an eviction suit. Schlotte raises seven issues on appeal. We affirm the trial court s judgment. STANDARD OF REVIEW A no-evidence motion for summary judgment is in effect a request for a pretrial directed verdict, which we will review for legal sufficiency. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, (Tex. 2003). We review the evidence in the record in the light most favorable to the non-movant, and disregard all contrary evidence and inferences. Id. A no-evidence challenge will be sustained when: (a) there is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively establishes the opposite of the vital fact. King Ranch, Inc., 118 S.W.3d at 751. More than a scintilla of evidence exists if the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004) (quoting Merrell Dow Pharm., 953 S.W.2d at 711). However, if the evidence does no 4

5 more than create a mere surmise or suspicion, then it is no evidence. Id. If the trial court grants a summary judgment motion without specifying its grounds for doing so, we affirm the judgment if the movant advanced any meritorious theory in the trial court. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993). WRONGFUL FORECLOSURE In Schlotte s first issue, he contends that he has standing to contest the foreclosure sale. He argues that the warranty deed executed by Paras gave him a legal ownership interest in the property. Alternatively, he argues he has an equitable ownership interest in the property. To have standing to contest the foreclosure of a deed of trust, a party must either be a mortgagor under the deed of trust or be in privity with the mortgagor, or have a legal or equitable interest in property affected by the foreclosure. Goswami v. Metro. Sav. & Loan Ass n, 751 S.W.2d 487, 489 (Tex. 1988). Modern cases have expanded the class of parties with standing to dispute the validity of the foreclosure sale by adopting a more liberal attitude toward this privity requirement.... [u]nder the current approach, the [plaintiff] need only have established a property interest in the deed of trust realty to impute a flaw in the sale. Long v. NCNB-Texas Nat l Bank, 882 S.W.2d 861, 867 (Tex. App. Corpus Christi 1994, no writ); see also Am. Sav. & Loan Ass n of Houston v. Musick, 531 S.W.2d 581, 586 (1975). Schlotte produced some evidence that he purchased Paras s interest in the property before the foreclosure and therefore acquired, at a minimum, an equitable interest in the property. We conclude Schlotte had standing to contest the validity of the sale. 5

6 In Schlotte s second issue, he argues that he produced sufficient evidence that a foreclosure sale had occurred. In its response, Option One concedes that a foreclosure sale occurred. In Schlotte s third issue, he contends that the trial court erred in granting summary judgment because Option One did not give him notice of the foreclosure sale, despite its knowledge of his ownership interest. Essentially, a wrongful foreclosure results when an irregularity or defect in the foreclosure sale proceedings causes or contributes to the recovery of an inadequate price for the property. See Musick, 531 S.W.2d at 587; see also Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App. Corpus Christi 2008, no pet.) (noting the elements of a wrongful foreclosure claim are: (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). A party seeking damages or invalidation of the sale under this theory must show that any damage, loss, or material injury was due to the irregularity in the foreclosure sale. Gainesville Oil & Gas Co. v. Farm Credit Bank of Tex., 847 S.W.2d 655, 659 (Tex. App. Texarkana 1993, no writ). Section of the Texas Property Code governs a foreclosure sale of real property pursuant to a deed of trust. See Tex. Prop. Code Ann (West Supp. 2011). 2 Section sets out specific requirements as to the time and place a foreclosure sale must be held, as well as the notice requirements that must be met. See (a)-(b). Under the statute, notice must be given at least 21 days before the date of 2 We cite to the current version of the statute for convenience because there have been no intervening amendments that are material to our disposition of this appeal. 6

7 the sale (b). Proper notice can be accomplished by serving written notice of the sale by certified mail on each debtor who, according to the records of the mortgage servicer of the debt, is obligated to pay the debt (b)(3). Section (d) provides: Notwithstanding any agreement to the contrary, the mortgage servicer of the debt shall serve a debtor in default under a deed of trust... with written notice by certified mail stating that the debtor is in default under the deed of trust or other contract lien and giving the debtor at least 20 days to cure the default before notice of sale can be given under Subsection (b) (d). Subsection (e) provides that, [t]he affidavit of a person knowledgeable of the facts to the effect that service was completed is prima facie evidence of service (e). The Property Code explains that for a debt secured by the debtor s residence a debtor s last known address means the debtor s residence address unless the debtor provided the mortgage servicer a written change of address before the date the mortgage servicer mailed a notice required by Section [.] (2)(A). For a trustee to lawfully undertake a foreclosure on real property, the trustee must comply with the notice requirements set forth in the deed of trust and as otherwise required by law. Stanley v. CitiFinancial Mortg. Co., 121 S.W.3d 811, 817 (Tex. App. Beaumont 2003, pet. denied). The trustee is not legally required to send personal notice of a foreclosure to persons not parties to the deed of trust. Id. (citing Musick, 531 S.W.2d at 588). Schlotte argues that Option One knew of his ownership interest in the property, but failed to give him notice of the foreclosure. Option One responds that because 7

8 Schlotte was a non-party to the deed of trust, Option One was not required to give him notice of the foreclosure sale. In support of his argument, Schlotte relies on Goswami and Abraham for the proposition that he was entitled to notice of the foreclosure sale. See Goswami, 751 S.W.2d at 487; Abraham v. Ryland Mortg. Co., 995 S.W.2d 890 (Tex. App. El Paso 1999, no pet.). However, Schlotte s reliance on these cases is misplaced. The Texas Supreme Court did not address notice issues in the Goswami case. See Goswami, 751 S.W.2d at Further, while the El Paso Court of Appeals did indicate that notice was an issue in the Abraham case, it went on to explain that it did not reach the issue of whether an unknown secondary purchaser was entitled to notice because, in that case, the mortgage company failed to submit summary judgment proof that it gave notice to anyone of its intent to accelerate the debt. Abraham, 995 S.W.2d at 894. Schlotte does not contend that he was a party to the deed of trust. Rather, he contends that Option One was aware of his ownership interest in the property and therefore should have given him notice. Schlotte further argues that Option One did not forward the foreclosure notice to Paras s last known mailing address. In support of this contention, he relies on the facsimile cover sheet used to transmit the executed forbearance agreement to Option One, which included a request purportedly from Paras that all future correspondence should be sent to: Mrs. Linda Paras, P.O. Box 1232 in Willis, Texas. Schlotte testified in his affidavit that, This was actually [his] mailing 8

9 address since [he] was now the person dealing with Option One. Notably, the cover sheet does not mention Schlotte or his interest in the property. Option One responds that the notation on the facsimile cover sheet did not amount to a proper change of address. In the deed of trust, the parties designated Ehlers Road in Conroe, Texas as the proper address Option One should use for purposes of notice to Paras. The deed of trust further required Paras to give all notices to Option One by first class mail to Option One s address stated in the deed of trust or otherwise provided by Option One. There is no evidence in the record to indicate that a change of address was sent to Option One by means other than through this facsimile transmission. Moreover, there is no evidence in the record that Paras did not receive notice. Schlotte only testified that he did not receive notice. According to the summary judgment evidence, Option One sent Paras proper notice that the note was in default and subject to foreclosure. Although Schlotte had an interest in the property, as noted above, he was not a party to the note or the deed of trust, and thus was not entitled to notice of the foreclosure sale. Paras, as the debtor on the note and the deed of trust, was entitled to notice. Because the note was secured by Paras s residence and she did not properly inform Option One of a change of address as required under the deed of trust, the proper location for service of notice was Paras s last known address. See Kainer v. ABMC Corp., No CV, 2006 WL , at *7 (Tex. App. Houston [1st Dist.] Feb. 23, 2006, no pet.) (mem. op.) (finding appellant did not raise a fact issue as to whether notice was sent to his last known address because 9

10 appellant did not provide debt holder his change of address by certified mail, as required by the deed of trust); see also Tex. Prop. Code Ann (2)(A). The record contains an Affidavit of Sending Notice of Sale, which was executed and recorded in Montgomery County, Texas. The affidavit reflects that Option One sent Paras notice of the foreclosure sale by certified mail to her last known address, as reflected in the deed of trust, at least 21 days preceding the date of the sale. Such notice is prima facie evidence of notice and was proper under section See (d). On appeal Schlotte argues summary judgment was improper on his wrongful foreclosure claim because he presented evidence that he was not given notice. As explained above, Schlotte is not entitled to notice under the statute, and the deed of trust does not contain a provision that would entitle Schlotte to notice. Option One has adduced summary judgment evidence that it complied with the contractual and statutory terms required to foreclose on the note. Therefore, we find that Schlotte has failed to demonstrate even a scintilla of evidence to raise a genuine issue of material fact regarding his right to notice. Further, Schlotte has failed to produce any evidence that the property was sold for a grossly inadequate selling price, or that there was a causal connection between the alleged notice defect and the grossly inadequate sale price. Accordingly, we overrule Schlotte s second and third issues. NEGLIGENCE In issue five, Schlotte contends that the trial court erred in granting summary judgment on his negligence cause of action because Option One did not address 10

11 negligence in its motion for summary judgment. In its motion, Option One argued that Schlotte lacks standing and has no justiciable interest in the suit [and] cannot present any evidence to the contrary. After Option One filed its motion, Schlotte amended his petition to add a claim for negligence and/or gross negligence. Option One did not amend its motion for summary judgment to specifically address the negligence claim. However, on appeal Option One contends that its standing argument, as asserted in its motion for summary judgment, is applicable to Schlotte s negligence claim. Generally, a defendant who does not amend or supplement its motion for summary judgment to address claims asserted in a plaintiff s amended pleading is not entitled to summary judgment on the plaintiff s entire case. Rust v. Tex. Farmers Ins. Co., 341 S.W.3d 541, 552 (Tex. App. El Paso 2011, pet. denied). Under these circumstances, the portion of a final summary judgment rendered on the plaintiff s entire case must generally be reversed because the judgment grants more relief than the party requested. See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 200 (Tex. 2001). However, in some circumstances, an amended or supplemental motion for summary judgment is not necessary when a ground asserted in a motion for summary judgment conclusively negates a common element of the newly and previously pleaded claims, or when the original motion is broad enough to encompass the newly asserted claims. Rust, 341 S.W.3d at 552. A trial court may grant summary judgment on later-pleaded causes of action if the grounds actually asserted in the motion show that the plaintiff could not 11

12 recover on the later-pleaded cause of action. Ortiz v. Collins, 203 S.W.3d 414, 423 (Tex. App. Houston [14th Dist.] 2006, no pet.). Schlotte based his negligence claim on essentially the same set of facts as he had previously pleaded. Schlotte alleged Option One was negligent for violating its duty to maintain homeowners and flood insurance on the Property. Schlotte alleged this obligation originated as part of the loan terms[.] He further claimed that Defendant negligently left Plaintiff uninsured. Option One s motion for summary judgment challenged Schlotte s standing generally to bring suit against Option One. Option One argued that although Schlotte did not expressly allege a breach of contract claim, his claims amounted to a veiled breach of contract claim against Option One. Option One sought summary judgment that there was no evidence of a valid, enforceable contract between Schlotte and Option One. Option One argued that it could not be held in breach of a non-existent contract or one to which they and Schlotte are not both parties. In his amended petition, Schlotte alleged that Option One breached a duty imposed on Option One in the terms of the loan agreement between Option One and Paras. Schlotte further alleged that Option One had a duty pursuant to its own internal policies to maintain standard home insurance on the property during foreclosure. However these policies were not in place to protect third parties not in privity of contract with Option One. While Option One did not amend its motion to specifically challenge the new negligence allegation, its original motion argued that there was no evidence of a 12

13 contractual relationship between it and Schlotte. Since Option One s alleged duty stems from the parties contractual relationship, its duty of care arises by virtue of its contract; its duties under the contract are owed to Paras as a party to the loan agreement, not to Schlotte. See MCI Telecomm. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999) ( A third party may recover on a contract made between other parties only if the parties intended to secure some benefit to that third party, and only if the contracting parties entered into the contract directly for the third party s benefit. ); see also Canfield v. Countrywide Home Loans, Inc., 187 S.W.3d 258, 263 (Tex. App. Beaumont 2006, no pet.). There is no evidence in the record to suggest that Schlotte was a third-party beneficiary to the deed of trust. Further, while there is some testimony to support that Schlotte attempted to negotiate an assumption of the mortgage, there is no evidence that Option One ratified Para s efforts to transfer her duties to Schlotte under the deed of trust. 3 We conclude that in arguing there is no evidence that Option One was in privity with Schlotte in the loan agreement and deed of trust, Option One asserted a ground that prevents Schlotte from recovering on his claims. We overrule Schlotte s fifth issue. Our disposition of these issues makes it unnecessary for us to address Schlotte s remaining issues. Further, we find that Schlotte s remaining issues are inadequately briefed and present nothing for review. See Tex. R. App. P. 38.1(i). 3 The deed of trust at issue provides that it may be modified or amended only by an agreement in writing signed by Borrower and Lender. 13

14 Accordingly, we conclude that the trial court properly granted Option One s noevidence motion for summary judgment. 4 We affirm the trial court s judgment rendered in favor of Option One. AFFIRMED. CHARLES KREGER Justice Submitted on March 15, 2012 Opinion Delivered May 31, 2012 Before Gaultney, Kreger, and Horton, JJ. 4 Schlotte does not challenge on appeal the trial court s summary judgment with respect to his asserted claims for violations of the Deceptive Trade Practices Consumer Protection Act and his claims for gross negligence. 14