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In re PlainsCapital Bank

Court of Appeals of Texas, Thirteenth District, Corpus Christi-Edinburg

March 27, 2017

IN RE PLAINSCAPITAL BANK

         On Petition for Writ of Mandamus.

          Before Chief Justice Valdez and Justices Rodriguez and Benavides [1]

          MEMORANDUM OPINION

          ROGELIO VALDEZ Chief Justice

         Real parties in interest Blanca E. Gonzalez, Jose S. Rodriguez, and ODP Management, L.L.C. originally brought suit against PlainsCapital Bank (PCB) for attempted wrongful foreclosure on three tracts of real property which secured a commercial loan held by the real parties. [2] By agreement, PCB did not foreclose on the property. The real parties subsequently filed a motion requesting the trial court to approve the sale of one of the three tracts of property and to require PCB to release its lien on that tract. After a non-evidentiary hearing, the trial court approved the sale, required PCB to release its lien on the tract, and allowed the real parties to pay the net proceeds of the sale to PCB in partial payment on the commercial loan.

         By petition for writ of mandamus, PCB contends that the trial court's orders granting the real parties' requested relief are void because there is no live justiciable controversy between the parties and thus, the trial court lacks jurisdiction. PCB further contends that the trial court abused its discretion in ordering it to release its lien on the real property without any basis in law or fact and without reference to any rules or guiding principles. We conditionally grant the petition for writ of mandamus, in part, and deny it, in part, as stated herein.

         I. Background

         On October 3, 2014, the real parties in interest filed suit against PCB for wrongful foreclosure. Their petition stated that they had received notice that PCB intended to foreclose on three tracts of property in Hidalgo County that were the collateral for a commercial loan obtained by the real parties. The real parties alleged that they were not behind on their loan payments and had otherwise complied with their obligations under the commercial note. The real parties sought a temporary restraining order and a temporary injunction preventing PCB from foreclosing on the properties. That same day, the trial court granted a temporary restraining order in favor of the real parties in interest.

         Counsel for PCB subsequently spoke with counsel for the real parties and agreed to remove the properties from foreclosure proceedings. The case then languished without further activity for almost two years. On September 13, 2016, the real parties filed a "Notice of Sale and Request for Partial Release of Lien" in the trial court. This pleading stated that PCB did not foreclose on the properties and that there had been no other activity in the case since the trial court originally granted the real parties' request for a temporary restraining order. According to this pleading, the real parties were in the process of trying to sell one of the tracts of property that served as collateral for the promissory note and proposed to pay PCB the sales price, less closing costs, after the sale, to reduce their indebtedness on the note. The real parties stated that the three tracts at issue were "still technically the subject of a pending lawsuit in this honorable court" and requested that the court approve the sale of one of the tracts, allow the real parties to tender the proceeds to PCB in reduction of the note, and order PCB to release its lien on Tract II "only for the purpose of closing the transaction."

         PCB filed a response to this notice arguing that there was no statutory or common law authority for the relief requested and that the requested relief would effectively rewrite the contract between the parties. PCB's response stated that it had not foreclosed on the properties and that there is no cause of action for attempted wrongful foreclosure.

         After a non-evidentiary hearing, by order signed on September 29, 2016, the trial court granted the real parties' requested relief. The trial court's order (1) allowed the real parties in interest to sell one tract of property; (2) approved the tender of 100% of the sales proceeds to PCB in reduction of the amount that the real parties owe PCB on the commercial loan; and (3) ordered PCB to release its lien on the subject tract "only for the purpose of closing the transaction."

         PCB subsequently filed a motion for reconsideration of this order and a motion to dismiss the case for lack of subject matter jurisdiction based on the lack of a justiciable issue. The motion to dismiss urged that, alternatively, even if the court possessed subject matter jurisdiction, the real parties' allegations against PCB failed to state a claim.

         The real parties thereafter filed a "First Amended Petition, Notice of Sale, and Request for Partial Release of Lien." This first amended petition affirms that PCB did not foreclose on the properties and generally reiterates the real parties' previous requests regarding the sale of one tract of the property and release of the lien for that tract. This pleading asserts a cause of action for breach of contract based on the attempted foreclosure that precipitated this case occurring in 2014. The real parties alleged that PCB breached its contract with them when it attempted to foreclose and accelerate the promissory note, and they further asserted that real parties were damaged because they had to hire counsel and file suit "in order to protect their interest." They sought damages in the amount of "at least" $6, 000 in attorney's fees.

         Under the "breach of contract" heading in the first amended petition, the real parties also alleged that "PCB is now threatening to withhold its release under the argument that there are outstanding IRS liens." According to the real parties, the liens are "resolved" and "are not violations of the note and any effort to foreclose based on liens that the [real parties] voluntarily disclosed and resolved to effectuate the sale is a direct violation of the promissory note and the temporary injunction that is in place through the trial of this case." The real parties thus sought actual damages of "at least" $631, 000 based on PCB's "conduct in refusing to release the lien and in attempting to foreclose again."

         The first amended petition also includes a claim for "wrongful foreclosure" and "violation of [the] temporary injunction." The real parties alleged that PCB induced any "technical" default in the terms of the note and that PCB wrongfully accelerated the maturity of the note. The petition states that, "[h]aving lost an injunction hearing and with a temporary injunction still in place, PCB now seeks to again accelerate and foreclose on ...


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