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Hart v. Wells Fargo Bank N.A.

Court of Appeals of Texas, Ninth District, Beaumont

June 29, 2017

HUBERT LEE HART AND GILDA BETH HART, Appellants
v.
WELLS FARGO BANK N.A., Appellee

          Submitted on June 21, 2016.

         On Appeal from the 284th District Court Montgomery County, Texas Trial Cause No. 14-06-06396-CV.

          Before Kreger, Horton, and Johnson, JJ.

          MEMORANDUM OPINION

          HOLLIS HORTON, Justice.

         Hubert Lee Hart and Gilda Beth Hart appeal from a summary judgment ruling that favored Wells Fargo Bank N.A. (the Bank) and allowed the Bank to judicially foreclose on the lot the Harts used to secure their home-equity loan. Because arguments the Harts present in their brief do not show that the trial court committed error when it granted the Bank's motion, we affirm the trial court's judgment.

         Background

         In 2006, the Harts obtained a Texas home-equity loan, which was collateralized by real property in Montgomery County, Texas. The property used to collateralize the loan is described in the Deed of Trust as lot 52, block one, of Stonecrest Ranch.[1] See Tex. Const. art. XVI, § 50. In 2010, the Bank acquired the Harts' loan by assignment from another lender. Subsequently, the Harts failed to timely make payments on the loan. As a result, the Bank instituted foreclosure proceedings in a District Court in Montgomery County. The Bank's foreclosure action was assigned cause number 10-10-11450, but the case was dismissed after the Harts and the Bank agreed to modify the terms of the loan.

         In late 2012, the Bank filed a second foreclosure action in Montgomery County, and this suit was assigned Cause Number 12-11-12144. Subsequently, the Bank dismissed Cause Number 12-11-12144 when the Harts sued the Bank in January 2013 in Montgomery County claiming the Bank had violated Texas law and the Texas Constitution in attempting to collect on the loan. The Harts' suit was assigned Cause Number 13-01-00500; the suit included a claim based on the Texas Debt Collection Practices Act and a claim based on the Bank's alleged failure to comply with provisions in the Texas Constitution governing home-equity loans. See Tex. Civ. Prac. & Rem. Code Ann. § 134.003 (West 2011) ("A person who commits theft is liable for the damages resulting from the theft."); see also Tex. Const. art. XVI, § 50(a)(6) (protecting a person's homestead from forced sale, mortgages, deeds of trust, and liens except in certain situations as expressly allowed). In response to the suit, the Bank removed Cause Number 13-01-00500 to a federal court in Houston, Texas, where it was assigned Civil Action Number 4:13-CV-578. In March 2014, the Bank obtained a summary judgment on the Harts' claim from the United States District Court for the Southern District, Houston Division.

         In June 2014, the Bank sued the Harts in a Montgomery County District Court to foreclose on lot 52. The suit was assigned Cause Number 14-06-06396, and it is that suit that is the subject of this appeal. In its petition in Cause Number 14-06-06396, the Bank alleged that "[a]ll conditions precedent for foreclosure have been performed or occurred" before it filed suit. When the Harts answered the Bank's suit, they alleged that the lien securing their home-equity loan was unenforceable because lot 52 contained 13.520 acres, which is more than the ten-acre size allowed to be used in collateralizing a home-equity loan based on section 50 of the Texas Constitution. See Tex. Const. art. XVI, § 50(a)(6)(H) (directing that a home-equity loan cannot be secured by any additional real property other than the homestead); Tex. Const. art. XVI, § 51 (explaining that a homestead in "a city, town or village, shall consist of lot or contiguous lots amounting to not more than 10 acres of land"). The Harts also alleged that although the Bank had been notified that lot 52 consisted of more than ten acres, the Bank had failed to cure the discrepancy violating the requirements of section 50 within the sixty-day period allowed by section 50. See Tex. Const. art. XVI, § 50(a)(6)(Q)(x). The Harts further alleged that because the Bank had not timely cured the defect, section 50 required the Bank to forfeit its right to collect any of the principal or interest on the loan, and to forfeit its right to foreclose on the lot. See id.

         In August 2015, the Bank filed a traditional motion for summary judgment, sought an order to foreclose on lot 52, and requested an award based on the principal and interest it was owed under the terms of the loan. See Tex. R. Civ. P. 166a(c). In its motion, the Bank argued that no genuine issues of material fact were in dispute because the summary judgment evidence conclusively established that it held a Deed of Trust on lot 52, that the Harts had defaulted on their obligations under the loan, that the Deed of Trust allowed the Bank to foreclose on lot 52, and that the Harts had failed to cure their default in payment as required by the terms of the loan. The Bank's motion also asserted that the Harts' complaints, which asserted that the loan was issued in violation of the restrictions on home-equity loans in section 50 of the Texas Constitution, were barred either by the four-year statute of limitations, or by the doctrine of res judicata. The Bank's res judicata claim was based on the history of the litigation over the loan in which the Harts had asked the court to resolve issues that included the validity of the loan.

         In response to the Bank's motion, the Harts claimed that they were "not seeking affirmative relief nor forfeiture of the loan." Instead, they argued that the Bank was not entitled to judicially foreclose on their homestead because lot 52 exceeded ten acres in violation of section 50 of the Texas Constitution. Additionally, the Harts argued that the statute of limitations did not prevent them from defending against the foreclosure action by demonstrating that the lien on their homestead was not valid based on provisions in the Texas Constitution. In responding to the Bank's res judicata claim, the Harts argued that, without citing any statutes or other legal authorities, the Bank could not rely on res judicata because the defects in the Bank's loan were being used to defend against the Bank's foreclosure action. According to the Harts' responses, the Bank should not be able to rely on the doctrine of res judicata because the doctrine, as applied in their case, was "unjust and nonsensical."

         In October 2015, the trial court granted the Bank's motion for summary judgment. The recitations in the judgment include findings that the loan is evidenced by a valid note and security agreement, that the documents were duly executed by the Harts, that the Harts defaulted on the loan, and that the Harts did not cure the default. The judgment rendered by the trial court allowed the Bank to foreclose on lot 52 and allowed lot 52 to be sold at public auction within thirty days of the judgment if the Harts failed to pay the full amount of the judgment. The judgment provides that "this is a final judgment that disposes of all issues and all relief not expressly granted is denied."

         The Harts timely appealed from the trial court's judgment. See Tex. R. App. P. 26.1 (requiring the appellant to file its notice of appeal within 30 days of the date the judgment is signed). In issue one, the Harts argue that the Bank was not entitled to rely on the four-year statute of limitations to prevent the court from considering their claim asserting that the Bank's lien is invalid. In issue two, the Harts argue that the Bank failed to conclusively establish that it had a valid lien because the evidence shows that lot 52 consists of more than ten acres.

         Standard ...


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