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Cantu v. Elbar Investments, Inc.

Court of Appeals of Texas, First District

May 18, 2017

ARSENIO CANTU, Appellant
v.
ELBAR INVESTMENTS, INC. AND TAX EASE FUNDING, L.P., Appellees

         On Appeal from the 127th District Court Harris County, Texas Trial Court Case No. 2012-15926

          Panel consists of Justices Jennings, Higley, and Massengale.

          MEMORANDUM OPINION

          Michael Massengale Justice.

         Seeking to set aside a tax-foreclosure sale of real property, appellant Arsenio Cantu filed a wrongful-foreclosure and declaratory-judgment action against appellees Elbar Investments, Inc. and Tax Ease Funding, L.P. In the alternative, Cantu sought an accounting of the proceeds from the sale.

         Elbar and Tax Ease filed separate motions for summary judgment. The trial court granted both motions, ordering that Cantu take nothing on his claims. The case proceeded to trial for determinations of attorney's fees and the fair market rental value of the property. After a jury decided these issues, the trial court rendered judgment in favor of Elbar and Tax Ease.

         Cantu appeals from the take-nothing judgment. But because he failed to satisfy the tender requirement applicable to a party seeking to set aside a foreclosure or tax sale, we affirm the judgment of the trial court.

         Background

         Arsenio Cantu owned Lots 24, 25, and 26 of Block 117, Houston Harbor, an addition to the City of Houston, Harris County, Texas. He became delinquent in his payment of ad valorem taxes. As a result, Harris County and several other taxing entities sought and obtained a judgment granting them a tax lien.

         Before a tax sale could be conducted, Cantu arranged for payment of the taxes on his behalf by Tax Ease Funding, L.P. Pursuant to Chapter 32 of the Tax Code, Tax Ease paid the property taxes, and the taxing entities transferred the tax lien to Tax Ease. In connection with this transaction, Cantu executed several documents, including a document entitled "Deed of Trust and Assignment of Leases and Rents." This document recited: "This lien is a transfer tax lien executed pursuant to section 32.06 of the Texas Tax Code." The deed identified the "Mortgaged Property" as "Lots 24, 25, and 26, Block 117, Houston Harbor, " with the "24" appearing as a handwritten and initialed alteration of the property description. Cantu also executed a promissory note in the amount of $21, 319.13.

         After Cantu executed the documents to transfer the tax lien, he defaulted on his payments. As a result, Tax Ease filed an application under the expedited-foreclosure procedure, Tex.R.Civ.P. 736, seeking an order allowing it to foreclose on Cantu's property. The court granted the order, and Tax Ease foreclosed on the property. At the foreclosure sale, the property was sold to Elbar Investments, Inc. for $65, 000.

         Following the foreclosure sale, Cantu brought suit against both Elbar and Tax Ease to set aside the foreclosure sale or to obtain an accounting of the proceeds of the sale. In his amended petition, Cantu sought a declaration that he "is the rightful owner of the property, " and he requested that the foreclosure sale be set aside because the deed of trust "was illegally altered and that it is void without any force and effect." He alleged that Tax Ease improperly had altered the deed of trust to include Lot 24. He also sought a declaration that the property was sold for "grossly less" than the fair market value of the property. An amended petition also included a claim for wrongful foreclosure. Elbar and Tax Ease both moved for summary judgment.

         Elbar filed a traditional motion for summary judgment that included four grounds challenging Cantu's wrongful-foreclosure and declaratory-judgment claims. The motion requested that the trial court order that Cantu take nothing on his claims against it, and that the case proceed to trial on Elbar's claims.

         Tax Ease filed a no-evidence motion for summary judgment in which it challenged Cantu's claims for wrongful foreclosure, declaratory judgment, and alternative claim for an accounting. Like Elbar, Tax Ease also requested that the trial court order that Cantu take nothing on his claims against it, and that the case proceed to trial for a determination of its attorney's fees as a prevailing party on the declaratory-judgment claim.

         The trial court granted both Elbar's and Tax Ease's motions. The orders did not specify the reasons for granting the motions. The case proceeded to trial only on the disputed fact issues of reasonable and necessary attorney's fees incurred by Elbar and Tax Ease and the fair market rental value of the property. After a jury ...


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