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Morris v. Deutsche Bank National Trust Co.

Court of Appeals of Texas, Fourteenth District

July 18, 2017

MATTIE T. MORRIS AND JOSEPH K. MORRIS, Appellants
v.
DEUTSCHE BANK NATIONAL TRUST COMPANY, Appellee

         On Appeal from the 268th District Court Fort Bend County, Texas Trial Court Cause No. 12-DCV-202714

          Panel consists of Justices Christopher, Brown, and Wise.

          OPINION

          Ken Wise Judge.

         This case involves a home-equity loan encumbering the appellants' homestead with a lien created by a constitutionally noncompliant deed of trust. When the appellants defaulted on the loan, the lender sold their home at a non-judicial foreclosure sale and evicted the appellants. The appellants appeal the trial court's summary judgment dismissing their claims against the lender, arguing that the Supreme Court of Texas's recent decision in Wood v. HSBC Bank USA, N.A., 505 S.W.3d 542 (Tex. 2016), compels a reversal. For the reasons explained below, we affirm in part, reverse in part, and remand.

         Background

         Mattie T. Morris and Joseph K. Morris owned a home at 621 Double Ridge Crossing, Missouri City, Fort Bend County, Texas (the Property). In 2004, the Morrises refinanced the Property by obtaining a home-equity loan from Long Beach Mortgage Company. In January 2006, the Morrises again refinanced the home-equity loan with PHM Financial Incorporated (PHM). PHM was aware that the Property was the Morrises' homestead because Mattie Morris executed a Homestead Affidavit and provided it to PHM.

         PHM's loan was secured by a lien and deed of trust that did not contain the provisions required by Section 50(a)(6) of the Texas Constitution for home-equity loans. In fact, the deed of trust expressly provided:

28. Loan Not a Home Equity Loan. The Loan evidence by the Note is not an extension of credit as defined by Section 50(a)(6) of Section 50(a)(7), Article XVI, of the Texas Constitution. . . .

The deed of trust also provided that, on appropriate notice and opportunity to cure, the lender could sell the Property through a non-judicial foreclosure proceeding.

         It is undisputed that, because the loan with PHM was a refinance of a home-equity loan, it should likewise have been a home-equity loan that complied with the requirements of the Texas Constitution, Article XVI, Section 50(a)(6).

         The loan was assigned to several different entities over the years. Deutsche Bank National Trust Company (the Bank) was assigned the loan documents in December 2010. The Morrises failed to make payments, and in July 2012, the Bank notified the Morrises that it would sell their home the next month in a foreclosure sale. The Property was sold to the Bank at a non-judicial foreclosure sale on August 7, 2012, for $659,900.89. The Bank also evicted the Morrises.

         The Morrises sued the Bank in December 2012. Initially, the Morrises alleged that the Bank wrongfully conducted a foreclosure sale of the Property without proper notice to them. The Morrises later amended their petition to assert that the Bank wrongfully foreclosed on the Property based on an invalid home-equity lien that failed to comply with the Texas Constitution, Article XVI, section 50(a)(6). The Morrises' claims included "Violation of the Texas Constitution Article XVI, §§ 50(a)(6)"; "Improper Foreclosure Without a Court Order in violation of TEX. CONST. art. XVI, § 50(a)(6)(D)"; "Slander of Title/Wrongful Eviction"; conversion of personal property and theft; and declaratory judgment.

         In late 2015, the Bank filed a traditional and no-evidence summary judgment motion challenging the claims made in the Morrises' fifth amended petition. The Bank's primary argument was that the Morrises' claims were barred by the statute of limitations.

         The Morrises then filed a sixth amended petition, dropping some claims against the Bank and adding others. The added claims were "Plaintiffs' Homestead was Protected from Forced Sale Because the Lien Did Not Fall into any Category under Section 50(a) of the Texas Constitution"; "Violation of the Texas Constitution Article XVI, §§ 50(a)(6)(D)"; "Broken Chain of Title"; wrongful foreclosure; and trespass. The Morrises also maintained their claims for slander of title/wrongful eviction, conversion of personal property, and declaratory judgment. The Bank responded with a supplement to its motion for summary judgment addressing the new claims.

         On March 25, 2016, the trial court signed an "Order and Judgment" granting summary judgment in favor of the Bank. The court found that the Morrises "cannot sustain any cause of action based upon allegations that (1) Defendant violated Texas Constitution Article XVI, § 50(a)(6); (2) a defect exists in Plaintiff's Home Equity Note or Deed of Trust; or (3) Defendant lacked standing or authority to foreclose." The trial court additionally addressed each of the Morrises' claims in separate paragraphs as follows:

Summary judgment is GRANTED with regard to the cause of action titled "Plaintiffs' Homestead was Protected from Forced Sale Because the Lien Did Not Fall Into Any Category Under Section 50(a) of the Texas Constitution," and such cause of action is dismissed with prejudice.
Summary judgment is GRANTED with regard to the cause of action titled "Violation of the Texas Constitution Article XVI, §§ 50(a)(6)(D)," and such cause of action is dismissed with prejudice;
Summary judgment is GRANTED with regard to the cause of action titled "Slander of Title/Wrongful Eviction," and such cause of action is dismissed with prejudice;
Summary judgment is GRANTED with regard to the cause of action titled "Request for Declaratory Judgment," and such cause of action is dismissed with prejudice, as no controversy exists as to whether Defendant violated Texas Constitution Article XVI, § 50(a)(6) or to whether Defendant had standing or authority to foreclose the Deed of Trust secured against the real property located at 621 Double Ridge Crossing, Missouri City, Texas 77459.
Summary judgment is GRANTED IN PART with regard to the cause of action titled "Broken Chain of Title" to the extent the cause of action is based upon allegations that (1) Defendant violated Texas Constitution Article XVI, § 50(a)(6); (2) a defect exists in Plaintiff's Home Equity Note or Deed of Trust; or (3) Defendant lacked standing or authority to foreclose, and any such cause of action is dismissed with prejudice. Otherwise, summary judgment is denied as to this claim and cause of action.
Summary judgment is GRANTED IN PART with regard to the cause of action titled "Wrongful Foreclosure" to the extent the cause of action is based upon allegations that (1) Defendant violated Texas Constitution Article XVI, § 50(a)(6); (2) a defect exists in Plaintiff's Home Equity Note or Deed of Trust; or (3) Defendant lacked standing or authority to foreclose, and any such cause of action is dismissed with prejudice. Otherwise, summary judgment is denied as to this claim and cause of action.
Summary judgment is GRANTED IN PART with regard to the cause of action titled "Trespass" to the extent the cause of action is based upon allegations that (1) Defendant violated Texas Constitution Article XVI, § 50(a)(6); (2) a defect exists in Plaintiff's Home Equity Note or Deed of Trust; or (3) Defendant lacked standing or authority to foreclose, and any such cause of action is dismissed with prejudice. Otherwise, summary judgment is denied as to this claim and cause of action.
Summary judgment is GRANTED IN PART with regard to the cause of action titled "Conversion of Personal Property and Theft" to the extent the cause of action is based upon allegations that (1) Defendant violated Texas Constitution Article XVI, ยง 50(a)(6); (2) a defect exists in Plaintiff's Home Equity Note or Deed of Trust; or (3) Defendant lacked standing or authority to foreclose, and any such cause of action is ...

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