Court of Appeals of Texas, Third District, Austin
THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
NO. D-1-GN-17-006729, HONORABLE AMY CLARK MEACHUM, JUDGE
Justices Goodwin, Baker, and Triana
J. BAKER, JUSTICE.
McMillan appeals from the trial court's order granting a
plea to the jurisdiction filed by Kary Aycock, Jerad Kolarik,
and Little City Investments, Inc. (collectively, "Little
City") and dismissing his suit with prejudice. We will
modify the judgment and, as modified, affirm it.
October 2014, Little City loaned money to SOCO Real Estate,
LLC, (SOCO) to purchase real property located at 808 Avondale
Road in Austin (the Property). McMillan, on behalf of SOCO,
executed a promissory note in the original principal amount
of $960, 000. The note was secured by a deed of trust.
Approximately one year later SOCO defaulted, and Little City
declared the note due on November 1, 2015. Rather than
proceed with foreclosure, Little City and SOCO entered into a
Reinstatement Agreement, extending the maturity date of the
note and providing for new payment terms. The parties agreed
that the Reinstatement Agreement did not "in any way
prejudice [Little City's] rights regarding future
defaults specified in the note and deed of trust."
note matured on the extended date of December 31, 2016.
Little City declared SOCO in default for nonpayment. In
February 2017, McMillan filed suit in Travis County district
court seeking a restraining order preventing
foreclosure. The trial court granted a temporary ex
parte restraining order preventing the sale, after which
McMillan voluntarily dismissed the suit. In March 2017,
McMillan filed another suit in Travis County district court
again seeking to restrain Little City from foreclosing on the
Property. McMillan alleged various causes of action
including fraud, negligent misrepresentation, and breach of
contract, and sought to restrain Little City from foreclosing
on the Property. The trial court granted Little City's
motion for summary judgment and dismissed the suit in
November 2017. The trial court expressly found that McMillan
failed to present evidence "sufficient to show that he
has standing to assert any claims against any party in [the]
SOCO had filed for Chapter 11 bankruptcy protection in April
2017.In July 2017, the United States Bankruptcy
Court for the Western District of Texas lifted the bankruptcy
stay to allow Little City to foreclose on the Property. After
the foreclosure, McMillan refused to vacate the Property, and
Little City filed a forcible detainer action in a Travis
County justice court. The Justice of the Peace rendered
judgment granting Little City possession of the Property.
This judgment was appealed to a Travis County county court at
law, which awarded possession of the Property to Little
underlying proceeding was filed on December 13, 2017.
McMillan sought to set aside the foreclosure and sale of the
Property. Little City filed a plea to the jurisdiction
asserting, among other things, that McMillan lacked standing
to challenge the foreclosure because he was not the mortgagor
on the deed of trust pursuant to which Little City foreclosed
on the Property. The trial court granted the plea to the
jurisdiction in March 2018, and McMillan perfected this
appeal, Little City asserts that the trial court properly
granted its plea to the jurisdiction because McMillan had no
standing to bring the wrongful foreclosure suit. Little City
also filed a motion to dismiss the appeal for lack of
subject-matter jurisdiction. Standing is a component of
subject-matter jurisdiction. DaimlerChrysler Corp. v.
Inman, 252 S.W.3d 299, 304 (Tex. 2008) ("A court
has no jurisdiction over a claim made by a plaintiff without
standing to assert it."); Texas Dep't of Parks
& Wildlife v. Miranda, 133 S.W.3d 217, 228 (Tex.
2004) ("[A] court must not proceed on the merits of a
case until legitimate challenges to its jurisdiction have
been decided."). Standing must exist at the time a
plaintiff files suit and must continue to exist between the
parties at every stage of the legal proceedings, including
the appeal; if the plaintiff lacks standing at the time suit
is filed, the case must be dismissed, even if the plaintiff
later acquires an interest sufficient to support standing.
Martin v. Clinical Pathology Labs., Inc., 343 S.W.3d
885, 888 (Tex. App.-Dallas 2011, pet. denied); Bell v.
Moores, 832 S.W.2d 749, 754 (Tex. App.-Houston [14th
Dist.] 1992, writ denied) ("A trial court determines its
jurisdiction at the time a suit is filed. At that time, the
court either has jurisdiction or it does not. Jurisdiction
cannot subsequently be acquired while the suit is
pending."); see also Texas Ass'n of Bus. v.
Texas Air Control Bd., 852 S.W.2d 440, 446 n.9 (Tex.
1993) ("Our concern is with a party's right to
initiate a lawsuit and the trial court's corresponding
power to hear the case ab initio. Standing is determined at
the time suit is filed in the trial court . . . .").
may be raised in a plea to the jurisdiction. See Brown v.
Todd, 53 S.W.3d 297, 305 n.3 (Tex. 2001) ("Because
standing is a component of subject matter jurisdiction, we
consider [the plaintiff's] standing as we would a plea to
the jurisdiction."). "A plea to the jurisdiction is
a dilatory plea." See Bland Indep. Sch. Dist. v.
Blue, 34 S.W.3d 547, 554 (Tex. 2000). Its purpose is
"to defeat a cause of action without regard to whether
the claims asserted have merit." Id. A plea to
the jurisdiction may challenge whether the plaintiff has
alleged facts sufficient to affirmatively demonstrate
jurisdiction or whether the jurisdictional facts alleged by
the plaintiff actually exist. See City of Waco v.
Lopez, 259 S.W.3d 147, 150 (Tex. 2009).
plea to the jurisdiction challenges the existence of
jurisdictional facts, the trial court must consider the
relevant evidence submitted by the parties when necessary to
resolve the jurisdictional issue. Miranda, 133
S.W.3d at 227. The proper arbiter of the evidence and the
corresponding standards of appellate review depend on whether
the existence of jurisdictional facts implicates the merits
of the plaintiff's case. University of Tex. v.
Poindexter, 306 S.W.3d 798, 806 (Tex. App.-Austin 2009,
no pet.). Because the jurisdictional issue in the present
case does not implicate the merits of McMillan's wrongful
foreclosure claim, we will confine our discussion to the
standards applicable in such cases. When the jurisdictional
facts are undisputed, the trial court rules on the plea to
the jurisdiction as a matter of law, and on appeal the trial
court's ruling is reviewed de novo. Id. If the
facts are disputed, the court, not a jury, will make
necessary fact findings to resolve the jurisdictional issue.
Id. On appeal, such findings-whether explicit or
implicit-may be challenged for legal or factual sufficiency.
Id. In the present case, the issue is whether
McMillan had standing to bring a claim of wrongful
foreclosure, and the evidence bearing on that issue is not
disputed. Thus, whether McMillan has standing to bring this
suit is a question of law that we review de novo.
issue of who properly has standing to contest a foreclosure
sale in Texas is well settled. Goswami v. Metropolitan
Sav. & Loan Ass'n, 751 S.W.2d 487, 489 (Tex.
1988). "As a general rule, only the mortgagor or a party
who is in privity with the mortgagor has standing to contest
the validity of a foreclosure sale pursuant to the
mortgagor's deed of trust." Id. (citing
Estelle v. Hart, 55 S.W.2d 510, 513 (Tex. Comm'n
App. 1932, opinion adopted)); Mercer v. Bludworth,
715 S.W.2d 693, 698 (Tex. App.-Houston [1st Dist.] 1986, writ
ref'd n.r.e.). McMillan's petition does not allege
that he is the mortgagor of the Property. Thus, his pleading
does not affirmatively demonstrate jurisdiction. In its plea
to the jurisdiction, Little City presented evidence that SOCO
was the record title holder of the Property and the
mortgagor, not McMillan. This evidence consisted of the
affidavits of Kary Aycock and Jerad Kolarik, and a copy of
the Reinstatement Agreement identifying SOCO as the owner of
the Property, the maker of the note and the grantor of the
deed of trust. This evidence was undisputed by ...