United States District Court, W.D. Texas, El Paso Division
VERONICA VASQUEZ RIVERA, Individually and as Independent Executrix of the Estate of Felipe B. Rivera, Plaintiff,
WELLS FARGO BANK, N.A., Defendant,
MEMORANDUM OPINION AND ORDER
C. GUADERRAMA UNITED STATES DISTRICT JUDGE
before the Court are Defendant Wells Fargo Bank, N.A.'s
("Wells Fargo") "Second Amended Motion for
Summary Judgment and Brief in Support" (ECF No. 58)
("Defendant's Motion for Summary Judgment")
filed on October 13, 2017, and Plaintiff Veronica Vasquez
Rivera's ("Veronica") "Motion for Summary
Judgment" (ECF No. 59) ("Plaintiffs Motion for
Summary Judgment") filed on October 16. The parties'
briefing on the motions was completed in November
March 12, 2018, pursuant to Federal Rule of Civil Procedure
56(f)(2), the Court notified the parties that it may resolve
their disputes on a ground not raised by their motions and
ordered the parties to submit supplement briefs addressing
that ground. The parties have complied with that
order. Having carefully considered the
parties' arguments and record evidence, the Court, for
the reasons that follow, DENIES Veronica's motion and
GRANTS Wells Fargo's motion as supplemented by additional
otherwise stated, the following facts are undisputed. In
1978, Felipe B. Rivera ("Felipe"), now deceased,
and Mary Collins f/k/a Mary Rivera ("Mary")
married. In September 1988, they bought a home
located at 5828 Bagdad Way, El Paso, Texas 79924
("Property"), which is the subject of this
lawsuit. In July 2006, they divorced, pursuant to a
divorce decree entered by a divorce court. Regarding the
Property, the decree stated only that: "IT IS FURTHER
ORDERED AND DECREED that the [P]roperty and all improvements
located thereon ... shall be refinanced and MARY RIVERA shall
receive $40, 000.00 as her share of the house's net
equity to be paid within ninety (90) days of May 22,
2006." By the time of the divorce, Mary resided
in Michigan. Felipe continued to reside at the
Property, and Veronica moved in and began to reside there in
2009, Mary filed a petition with the divorce court to enforce
Felipe's obligations under the divorce decree. Her
petition alleged, inter alia, that Felipe
"failed to turn over her $40, 000.00 as her share of the
net equity for her interest in the marital residence of the
parties at 5828 Baghdad. El Paso. Texas." She requested
that a lien be placed against the Property to secure the
unpaid payments in the amount of $40, 000.
August 26, 2009, Felipe obtained a reverse mortgage loan from
Wells Fargo by executing a Closed-End Fixed Rate Note
("Note") and a Texas Home Equity Conversion Loan
Agreement ("Loan Agreement") that was secured by a
Closed End Fixed Rate Home Equity Conversion Deed of Trust
("Deed of Trust"). The Deed of Trust secured
repayment of the Note by creating a lien interest in the
Property. Felipe received a lump sum of $28,
253.37 under the Loan Agreement. Section 2.2.2 of the Loan
Agreement states that the lump-sum money "shall be used
by Lender to discharge the lien on the Property listed in
the Schedule of Liens (Exhibit 2) attached to and made a part
of this Loan Agreement"; the Schedule of Liens, in
turn, lists "Mary Rivera" and "$40,
000." Mary did not sign the Note, the Loan
Agreement, or the Deed of Trust.
services in connection with the loan, Wells Fargo had
retained Lawyers Title of El Paso, a title insurance
company. Pursuant to its closing conditions for
the loan, Wells Fargo required the title company to have Mary
execute a special warranty deed to remove her from the title
of the Property. Sometime prior to August 26, 2009, Mary
signed a pay-off statement and provided it to the title
company. Also prior to that date, Mary agreed to
sign a special warranty deed in exchange for $40,
000. Subsequently, Mary signed a special
warranty deed, granting her interest in the Property to
Felipe before a notary public in Michigan. The parties
dispute when Mary signed the deed: according to Wells Fargo,
August 26, 2009, but according to Veronica, August 29,
2009. At some point, Mary received $40, 000,
which was paid from the proceeds of the loan.
August 28, 2009, Felipe and Veronica were married by a
judge. Felipe died in February
2014. Following his death, his estate was
probated: Veronica was appointed independent executrix of his
estate, and letters of testamentary were issued in April 2015
by the probate court. Veronica is the heir to the Property
per Felipe's will. To date, she continues to reside at
loan became due upon Felipe's death. When Veronica
failed to cure the default, Wells Fargo initiated foreclosure
proceedings. In February 2016, Wells Fargo mailed a
notice informing Veronica that the loan had been accelerated
and that the Property was scheduled to be sold at foreclosure
sale on May 3, 2016.
2, 2016, Veronica, in her individual capacity and as the
independent executrix of Felipe's estate, brought this
lawsuit against Wells Fargo in the 243rd Judicial District
Court in El Paso County, Texas. In June 2016, Wells Fargo
removed the case to federal court, premised upon diversity
jurisdiction. 28 U.S.C. §§ 1332(a), 1141, 1146.
2017, Veronica filed her First Amended Complaint (ECF No.
35). Therein, she claims the Property as her homestead and
asserts a cause of action under the Texas Constitution,
Article XVI, §§ 50(a)(7), 50(k)(1), and 50(c),
challenging the reverse mortgage lien. As relief,
she asks the Court to declare the lien is limited to an
undivided 50 percent share of the Property and permanently
enjoin Wells Fargo from foreclosing on her homestead unless
the foreclosure is limited to an undivided 50
percent share of the Property.
judgment is appropriate when "the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
Fed.R.Civ.P. 56(a). "A genuine dispute of fact exists
when evidence is sufficient for a reasonable jury to return a
verdict for the non-moving party, and a fact is material if
it 'might affect the outcome of the suit.'"
Willis v. Cleco Corp., 749 F.3d 314, 317 (5th Cir.
2014) (citing Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986))). In deciding whether a genuine dispute
as to material fact exists, a trial court considers all of
the evidence in the record and "draw[s] all reasonable
inferences in favor of the nonmoving party, " but
"refrain[s] from making credibility determinations or
weighing the evidence." Turner v. Baylor Richardson
Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007) (citation
and internal quotation marks omitted).
the party moving for summary judgment "bears the initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a
genuine issue of material fact." E.KO.C. v. LHC
Grp., Inc., 773 F.3d 688, 694 (5th Cir. 2014)
(alterations in original) (quotation marks and citation
omitted). If the moving party succeeds, "the onus shifts
to the nonmoving party to go beyond the pleadings and by her
own affidavits, or by the depositions, answers to
interrogatories, and admissions on file, designate specific
facts showing that there is a genuine issue for trial."
Id. (internal quotation marks and citation omitted).
However, the nonmoving party "cannot defeat summary
judgment with conclusory allegations, unsubstantiated
assertions, or only a scintilla of evidence." Davis
v. Fort Bend Cty., 765 F.3d 480, 497 n.20 (5th Cir.
2014) (quotation marks and citation omitted).
action, Veronica challenges the validity of the reverse
mortgage lien under the Texas Constitution. Compl.
¶¶ 15-21; Pl's Mot. for Summ. J. at 8-9.
Article XVI, Section 50 of the constitution provides that
"[n]o mortgage, trust deed, or other lien on the
homestead shall ever be valid unless it secures a
debt described by this section[.]" Tex. Const, art. XVI,
§ 50(c) (emphasis added); see also Wood v. HSBC Bank
USA, N.A., 505 S.W.3d 542, 544 (Tex. 2016) ("This
language [in Section 50(c)] is clear, unequivocal, and
binding."). Section 50 protects the homestead from
foreclosure for the payment of debts subject to eight
exceptions, one of which covers reverse mortgages. Tex.
Const, art. XVI, § 50(a) ("The homestead of a
family, or of a single adult person, shall be, and is hereby
protected from forced sale, for the payment of all debts
except for:... (7) a reverse mortgage"); Garofolo v.
Ocwen Loan Servicing, L.L.C., 497 S.W.3d 474, 477 (Tex.
2016). As critical in this case, Section 50(k)(1) defines
"reverse mortgage" as "an extension of
credit... that is secured by a voluntary lien on homestead
property created by a written agreement with the consent
of each owner and each owner's spouse" Tex.
Const, art. XVI, § 50(k)(1) (emphasis added).
argues that on August 26, 2009, when the lien was created,
she was an "owner, " but she did not consent to the
lien. Pl's Mot. Summ. J. at 11; see also Tex.
Const, art. XVI, § 50(k)(1) (" ... a voluntary lien
. .. created by a written agreement with the consent of
each owner [i.e., Mary] and each owner's
spouse." (emphasis added)). Therefore, Veronica posits,
if the lien is valid at all, it is limited to 50 percent
undivided interest in the Property, which was all that Felipe
owned on that day. Id. at 10-11. Wells Fargo
responds that Mary consented to the creation of the lien.
Resp. to Pl's Mot. for Summ. J. at 8-12. In support,
Wells Fargo points to various actions by Mary, including her
execution of the special warranty deed (which Wells Fargo
assumes arguendo occurred on August 29, 2009), as
well as her deposition testimony. Id. at 11-12;
see also Reply to Def.'s Mot. for Summ. J. at
7-8. Veronica counters that even if Mary consented by signing
the special warranty deed on August 29, it was too late for
the lien to become valid: by then, Veronica and Felipe were
married for a day (they married on August 28), but Veronica
did not consent to the lien. See Pl's Mot. Summ.
J. at 11; Reply to Pl's Mot. for Summ. J. at 5-6; see
also Tex. Const, art. XVI, § 50(k)(1) (" ... a
voluntary lien ... created by a written agreement with
the consent of each owner and each owner's
spouse [i.e., Veronica]." (emphasis added)).
their initial arguments reveal, Veronica asserts-without
citing any case, binding or otherwise-and Wells Fargo assumes
that on August 26, 2009, when the challenged lien was
created, Mary was an "owner, " as that term is used
in Article XVI, Section 50(k)(1) and thereby further
assumes that Mary's consent was required for the lien
creation for it to be valid under Section 50(c). It appearing
to the Court that, that assertion and assumption may not be
warranted here, on March 12, 2018, the Court issued an order
notifying the parties that it may decide their motions on
whether Mary's consent was required, see Fed. R.
Civ. P. 56(f)(2) ("After giving notice and a reasonable
time to respond, the court may... grant the motion on
grounds not raised by a party."),  and ordered
for additional briefing on the following issue:
Whether or not, under the facts of this case, Mary's
consent to the creation of the lien was required for the lien
to be valid under Sections 50(c), as that section applies to
Sections 50(a)(7) and 50(k)(1). Stated another way, whether
or not Mary was an "owner" on August 26, 2009, as
that term is used in Section 50(k)(1).
& Order for Briefing at 2. The Court notified the parties
that that issue depends on what homestead interest Mary had
in the Property on August 26-which, in turn, may depend on a
proper construction of Mary and Felipe's divorce decree.
Having received the parties' additional briefs, the Court
now addresses this issue.
parties cite no case interpreting "owner, " as the
term appears in Section 50(k)(1). Texas agencies, which have
the delegated authority to interpret Article XVI, Section 50
of the constitution, see Wood, 505 S.W.3d at 574,
have interpreted "owner, " as the term appears in a
parallel constitutional provision regarding home-equity
loans,  to mean "[a] person who has the
right to possess, use, and convey, individually or with
the joinder of another person, all or part of the homestead,
" 7 Tex. Admin. Code § 153.1(13) (emphasis added).
Sine qua non of homestead ownership interest is the
possessory right. See Laster v. First Huntsville Props.
Co., 826 S.W.2d 125, 130 (Tex. 1991) (Section 50's
"homestead protection ... can arise only in the person
or family who has a present possessory interest in the
subject property."); In re Odes Ho Kim, 748
F.3d 647, 661-62 (5th Cir. 2014) ("When a spouse no
longer possesses the real property that was impressed with
homestead rights, [that spouse's] homestead rights in
that property cease to exist." (citing cases)).
Court turns to Mary and Felipe's divorce decree to
ascertain what homestead interest each had in the Property as
a result of their divorce. When interpreting a divorce
decree, which is a type of judgment, Texas courts apply the
general rules regarding construction of judgments. Wilde
v. Murchie, 949 S.W.2d 331, 332 (Tex. 1997).
"Courts should not give conclusive effect to the
judgment's use or omission of commonly employed decretal
words, but should instead determine what the trial court
adjudicated from a fair reading of all the judgment's
provisions." Id. at 333. If the decree, read as
a whole, is unambiguous as to the property's disposition,
then courts must effectuate the decree as written.
Id. If the decree is ambiguous-i.e.,
subject to more than one reasonable interpretation-then
courts must review the record along with the decree to aid in
its construction. Shanks v. Treadway, 110 S.W.3d
444, 447 (Tex. 2003). Whether a divorce decree is ambiguous
is a question of law. Coker v. Coker, 650 S.W.2d
391, 394 (Tex. 1983).
is particularly instructive here. Although the divorce decree
in Wilde did not expressly divest the wife of her
interest in the community homestead, the decree liquidated
her equity interest in the home and stipulated that the
husband assumed the debts on that property; the Texas Supreme
Court concluded that the decree indicated the divorce
court's decision "to award the home solely to [the
husband], " Wilde, 949 S.W.2d at 333, that is,
"the divorce court's decision that the husband take
sole possession of the community home, "
Tex. Workers' Comp. Ins. Fund v. Lopez, 21
S.W.3d 358, 362 (Tex. App.-San Antonio 2000, pet. denied)
(emphasis in original) (interpreting Wilde). The
actions of the parties after the divorce (he had sole
possession for twenty years and she sought only to collect
the monetary award that, as stated in the decree, included
her equity in the homestead) further supported the
court's conclusion. Wilde, 949 S.W.2d at 333.
as in Wilde, the divorce decree does not expressly
divest Mary of her interest in the Property, but it
liquidated her equity interest in the home. The decree
states: "IT IS FURTHER ORDERED AND DECREED that the
[P]roperty and all improvements located thereon ... shall be
refinanced and MARY RIVERA shall receive $40, 000.00 as her
share of the house's net equity to be paid within ninety
(90) days of May 22, 2006." First Am. Compl., Ex. 1
(divorce decree) at 12. The decree, as a fair reading
indicates, stipulated that Felipe assumed all debts on the
Property, as he was ordered to refinance the Property. The
Court therefore concludes that the divorce court awarded the
Property solely to Felipe. Consequently, the Court
finds that the divorce court awarded Felipe sole
possession of the Property, Lopez, 21 S.W.3d at
362, and thereby awarded him "full homestead right"
in the Property, Hankins v. Harris,500 S.W.3d 140,
146-47 (Tex. App-Houston [1st Dist.] 2016, pet. denied)
(holding that "[a]fter the divorce, the remaining spouse
[as here, Felipe] received thsfuli homestead
interest pursuant to the divorce decree, " which
included stipulations that the entire property would be
transferred to that spouse in exchange for financial
consideration." (emphasis added)). Further because the
decree awarded sole ...