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Eichner v. Dominguez

Court of Appeals of Texas, Fourteenth District

June 13, 2017

KENNETH D. EICHNER, P.C., Appellant
v.
BEN DOMINGUEZ, II, PARC CONDOMINIUM ASSOCIATION, AND ASSOCIATION MANAGEMENT INC., Appellees

         On Appeal from the 125th District Court Harris County, Texas Trial Court Cause No. 2013-21379

          Panel consists of Justices Christopher, Busby, and Jewell.

          MEMORANDUM OPINION

          Kevin Jewell Justice

         This multi-party dispute centers on the priority of competing liens against a foreclosed condominium. In a previous lawsuit, the condominium association foreclosed on a lien against the condominium due to the owner's non-payment of fees. The condominium owner, Ben Dominguez, II, then filed the present suit against the condominium association for wrongful foreclosure. Dominguez's accounting firm, Kenneth D. Eichner, P.C., intervened in the suit, asserting lien rights of its own allegedly acquired under a promissory note for services rendered to Dominguez and secured by Dominguez's condominium. The accounting firm's petition in intervention asserted a contract claim against Dominguez for his default on the note and asserted rights against all parties under the firm's purportedly superior lien. The condominium association argued that its lien, not the accounting firm's lien, was superior and that the previous foreclosure had extinguished the firm's lien.

         The trial court rendered summary judgment against the accounting firm, and the firm appeals. It contends the trial court erred because the firm's lien is superior and the foreclosure proceeding did not extinguish it. The firm also argues that the trial court's judgment, which dismissed the firm's contract claim for Dominguez's default on the note, improperly granted more relief than sought because no party moved to adjudicate that issue.

         In this court, two of the three appellees filed a motion to dismiss, challenging our appellate jurisdiction. We carried that motion with the case.

         We now deny the motion to dismiss, reverse the trial court's judgment, and remand the case to the trial court for further proceedings.

         Background

         In this court, appellees are: (1) Dominguez, who owns a condominium located within the Parc IV and V Condominiums ("Parc Condominiums") in Houston, Texas; (2) Parc IV and Parc V Condominium Association ("the Association"), which is the condominium owners' association; and (3) Associated Management, Inc. ("AMI"), which manages the condominium property. In the trial court, Dominguez alleged that the Parc Condominiums were "allowed to deteriorate" to a physical condition necessitating "excessive" repairs, the cost of which the Association passed on to the condominium owners by way of increased monthly assessments. The Association allegedly also requested tens of thousands of dollars in "unanticipated special assessments." Dominguez apparently did not pay some or all of the assessments imposed, and the Association foreclosed on his condominium.

         The Association, however, was not the only entity purporting to possess a lien against Dominguez's condominium. Appellant Kenneth D. Eichner, P.C. ("Eichner"), an accounting firm, performed accounting services for Dominguez during or before 2007. In return, Dominguez agreed to pay Eichner roughly $12, 000 pursuant to a promissory note and pledged his condominium as collateral for the debt. Dominguez and Eichner executed a Security Agreement and Combined Note ("Security Agreement") to this effect in 2007. The Security Agreement was filed with the county clerk on June 19, 2007.

         It is unclear from the record when Dominguez failed to pay the assessments.[1] In 2013, Dominguez sued the Association and AMI for wrongful foreclosure. Eichner intervened and asserted claims against Dominguez and the Association. Specifically, Eichner asserted a breach of contract claim because Dominguez allegedly defaulted on the promissory note. Eichner also alleged that it possessed a valid lien on Dominguez's condominium that was superior to any lien claimed by the Association. Eichner sought relief of "the principal amount due and owing" on the promissory note.

         Dominguez, the Association, and AMI filed a joint motion for summary judgment ("Joint Motion"), arguing that the Association's lien was superior to Eichner's lien and that the Association's foreclosure judgment extinguished Eichner's lien. More particularly, the Joint Motion argued that the Association's lien was first in time, and thus superior to Eichner's alleged lien, because it was created when the condominium declaration was filed in 1978. The Joint Motion did not address Eichner's cause of action against Dominguez for breach of the promissory note and related relief. The only evidence attached to the Joint Motion was a business records affidavit and a copy of the Association's declaration.[2]

         The trial court granted the Joint Motion and held that the Association's lien was superior to Eichner's lien. The trial court also held that Eichner's lien was extinguished by the Association's foreclosure and, due to Eichner's failure to object or redeem its lien, Eichner's lien was no longer attached to the property.

         Dominguez later moved for final judgment, stating that Dominguez and the Association had entered into a Rule 11 agreement resolving all of Dominguez's claims. Because, Dominguez believed, the trial court previously "resolve[d] the claims brought forward by [Eichner], " Dominguez contended that "[t]here are no more legal issues to resolve" and asked the court to render a final judgment as to the entire case.

         The trial court granted Dominguez's motion for judgment and signed a final judgment. In substantive part, the judgment ordered: (1) the Association to transfer the condominium title to Dominguez; (2) Eichner to remove the lis pendens filed with the county clerk; (3) the county clerk to "remove from it[s] records or reflect as extinguished and no longer valid, the Security Agreement and Combined Note filed by [Eichner] on June 19th, 2007"; and (4) Dominguez to pay the Association roughly $42, 000 in satisfaction of the Rule 11 agreement and assessment arrearages.

         Eichner appeals the summary judgment and final judgment.

         Motion to Dismiss

         Before we consider the merits of Eichner's appeal, we first address a motion to dismiss filed by the Association and AMI because it implicates this court's appellate jurisdiction. See Lapiner v. Maimon, 429 S.W.3d 816, 820 (Tex. App.- Houston [14th Dist.] 2014, pet. denied). The Association and AMI moved to dismiss Eichner's appeal for want of jurisdiction, contending that Eichner's lien is void as a matter of law because Eichner did not seek to enforce its lien within the applicable limitations period set forth in Texas Civil Practice and Remedies Code section 16.035. We disagree that this limitations argument impairs our jurisdiction.

         The undisputed facts establish that the Security Agreement collateralizing the condominium was executed on June 6, 2007, and filed on June 19, 2007. Pursuant to the Security Agreement, Dominguez was obligated to pay the debt owed to Eichner no later than June 6, 2008. The Association and AMI-non-parties to the Security Agreement-contend that the Security Agreement became void on June 6, 2012, citing Texas Civil Practice and Remedies Code section 16.035. See Tex. Civ. Prac. & Rem. Code § 16.035(d) ("On the expiration of the four-year limitations period, the real property lien and a power of sale to enforce the real property lien become void."). The Association and AMI contend that Eichner did not bring suit for the recovery of real property or to foreclose on the lien within four years of the Security Agreement's maturity date. Thus, they argue, the lien is void as a matter of law and this court lacks jurisdiction because there is no live controversy.

         In response, Eichner argues that the Security Agreement remained effective at least until November 2013, in part because Dominguez allegedly acknowledged the debt in December 2009. Eichner also argues that the Association's and AMI's limitations argument-that Eichner's lien is void because its attempt to enforce it was untimely-is waived for failure to raise it in the trial court. We agree with Eichner's latter assertion.

         According to the motion to dismiss, Eichner's alleged lien is void. The sole rationale offered in support of appellees' position is that the alleged lien became void by the passage of time due to Eichner's failure to assert his lien rights within the applicable limitations period. The statute of limitations, however, is an affirmative defense. See Trelltex, Inc. v. Intecx, L.L.C., 494 S.W.3d 781, 785 (Tex. App.-Houston [14th Dist.] 2016, no pet.). It is waived if not timely pleaded or tried by consent. See Tex. R. Civ. P. 94; Frazier v. Havens, 102 S.W.3d 406, 411 (Tex. App.-Houston [14th Dist.] 2003, no pet.). Further, a party may not raise a limitations defense for the first time on appeal. See Caston v. Wiley, No. 14-14-01001-CV, 2016 WL 3131666, at *5 (Tex. App.-Houston [14th Dist.] June 2, 2016, no pet.) (mem. op.) (holding that limitations cannot be raised for the first time on appeal).

         Assuming without deciding that the Association and AMI have standing to assert limitations as an affirmative defense to Eichner's claims, they did not raise the defense below. In the trial court, the Association and AMI never contended that Eichner's lien was void due to Eichner's alleged failure to enforce it during a limitations period. Nor did they assert, or prove, that Eichner's intervention to assert its lienholder rights was barred as untimely. Appellees did not raise these arguments in their summary judgment motion or pleadings, nor did they direct the trial court to the Civil Practice and Remedies Code limitations provision on which their motion to dismiss is based. Being grounded on a limitations argument, the issues raised in the motion to dismiss do not implicate our appellate jurisdiction. See, e.g., Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71, 76-77 (Tex. 2000) (explaining distinction between right of plaintiff to relief and jurisdiction of court to afford it). We will not construe an unpreserved limitations defense as a jurisdictional obstacle to addressing Eichner's appellate issues.

         Accordingly, we deny the Association's and AMI's motion to dismiss.

         Analysis

         We next turn to the merits of Eichner's appeal. Eichner's issues on appeal can ...


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