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Allan v. Nationstar Mortgage, LLC

Court of Appeals of Texas, Fourteenth District

July 9, 2019

LINDA ALLAN, Appellant

          On Appeal from the 125th District Court Harris County, Texas Trial Court Cause No. 2016-09047.

          Panel consists of Justices Christopher, Bourliot, and Zimmerer.


          Tracy Christopher Justice.

         In this foreclosure case, Linda Allan appeals the summary judgment rendered in favor of appellee Nationstar Mortgage, LLC. In the two dispositive issues, she contends that summary judgment was improper because (a) Nationstar failed to conclusively establish that it was assigned the right to foreclose, and (b) Nationstar failed to pursue claims against a necessary party. Because the evidence conclusively established Nationstar's right to foreclose and the necessary-party complaint was waived, we affirm the trial court's judgment.

         I. Background

         In June 2008, lender Bristol Financial, Inc. made a home-equity loan of $284, 000 to Linda Allan. The Texas Home Equity Security Instrument identifies Linda Allan as the borrower, and as required by the Texas Constitution, the security instrument also was signed pro forma by her then-spouse Ziad A. Allan.[1] See Tex. Const. art. XVI, § 50(6)(A) (requiring a home-equity loan to be "secured by a voluntary lien on the homestead created under a written agreement with the consent of each owner and each owner's spouse"). The security instrument specifically provides, "Lender may return any payment or partial payment if the payment or partial payments are insufficient to bring the Extension of Credit current."

         The security instrument identifies Mortgage Electronic Registration Systems, Inc. ("MERS") as the lender's nominee and the beneficiary of the security agreement. MERS then assigned the note and deed of trust to Flagstar Bank, and Flagstar assigned them to appellee Nationstar.

         Linda defaulted on the loan but cured the default by entering into a "Home Affordable Modification Agreement." Under the terms of the Modification Agreement, the interest rate on Linda's loan was reduced and all late charges that had accrued as of the effective date of the agreement were waived, but all other past-due amounts were added to the principal. Linda also reaffirmed in the Modification Agreement that all terms of the original note and security instrument remained in effect except as modified.

         Linda again defaulted, and Nationstar accelerated the note and applied for an expedited order of foreclosure. See Tex.R.Civ.P. 736.1. In response, Linda filed this action. She alleged that the promissory note did not allow the lender to return partial payments and capitalize overdue amounts, and she characterized the partial payments that had been returned to her as further extensions of credit. She additionally alleged that Nationstar's attempt to foreclose was barred by limitations. She asked the trial court to declare that she owes nothing, or alternatively, to declare the amount of her indebtedness. She further sought declarations that Nationstar violated Article XVI, section 50 of the Texas Constitution, and that Nationstar is constitutionally barred from foreclosing on the property.

         In its counterclaim, Nationstar alleged that the Allans own the property and that Linda defaulted on the note securing their home equity loan. Although Nationstar made these allegations against Linda, as a counter-defendant, and against Ziad Allan, as a third-party defendant, Ziad was never served; thus, he did not become a party to this suit. Nationstar nevertheless filed a notice of nonsuit dismissing its claims against Ziad.

         Nationstar successfully moved for summary judgment both on Linda's claims and on its own counter-claims. The trial court dismissed Linda's claims with prejudice and declared that (a) the security instrument is binding, (b) Nationstar has a valid and binding security interest in the property, and (c) the property is subject to foreclosure. The trial court also ordered that its judgment have the force and effect of a writ of possession. Finally, the trial court rendered judgment against Linda for $484, 047.40, plus per diem interest, to be satisfied from the seizure and sale of the home at a public auction.

         Linda moved for a new trial on the ground that Nationstar failed to pursue its claims against Ziad despite its allegations that both Linda and Ziad own the home. She additionally argued that Nationstar failed to produce competent summary-judgment evidence that it is the assignee of the original lender, Bristol Financial. Nationstar responded, and the trial court allowed the motion to be overruled by operation of law. Linda now appeals the judgment.

         II. Issues and Standard of Review

         Linda's first two issues reurge the arguments from her motion for new trial, namely, that Nationstar failed to establish that it received rights in the property through an assignment from the original lender, and that Nationstar pleaded, but failed to pursue, claims against Ziad Allan as a joint owner of the property.[2] In her third issue, Linda asserts that the trial court erred in considering evidence that Nationstar attached to its motion for new trial, because evidence introduced after ...

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