angel-bernal-bell-and-maria-sonia-bernal-v-saxon-mortgage-services-inc ( 2010 )

i i i i i i
MEMORANDUM OPINION
No. 04-10-00099-CV
Angel BERNAL-BELL and Maria Sonia Bernal,
Appellants
v.
SAXON MORTGAGE SERVICES, INC., Deutsche Bank National Trust Company, Morgan
Stanley ABS Capital 1 Inc. Trust 2007-NC3 and Shine Bright Acquisitions, L.L.C.,
Appellees
From the 25th Judicial District Court, Guadalupe County, Texas
Trial Court No. 09-1632-CV
Honorable W. C. Kirkendall, Judge Presiding
Opinion by: Steven C. Hilbig, Justice
Sitting: Sandee Bryan Marion, Justice
Steven C. Hilbig, Justice
Marialyn Barnard, Justice
Delivered and Filed: August 18, 2010
AFFIRMED
Angel Bernal-Bell and Maria Sonia Bernal appeal the order denying their application for a
temporary injunction. We affirm.
BACKGROUND
In 2006, the Bernals purchased a home with a down payment of $190,035.99 in cash, and
executed a note to Kingston Mortgage in the amount of $64,185.00. The note was secured by a deed
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of trust, and the loan was serviced by New Century Mortgage. Some time before January 2009, the
note was sold to Deutsche Bank National Trust Company, as trustee for Morgan Stanley ABS
Capital 1 Inc. Trust 2007-NC3 (“Deutsche Bank”), and the servicing was transferred to Saxon
Mortgage Services, Inc. (“Saxon”).
The Bernals fell behind on their mortgage payments, and Saxon, through its attorneys, sent
notice of default to the Bernals by letter dated January 26, 2009. The notice identified Duetsche
Bank as the Mortgagee, and the default amount as $2,195.06. Mrs. Bernal testified that upon
receiving the letter she contacted Saxon and explained that her husband had been in an accident,
which prevented him from working and from making their mortgage payments. Saxon sent the
Bernals a letter requesting information related to their hardship and inability to pay the mortgage.
Mrs. Bernal testified she believed Saxon was working with her to modify the mortgage payments
and prevent a foreclosure.
In the meantime, Deutsche Bank sent the Bernals two notices of acceleration. One was dated
May 27, 2009, and the second was dated June 1, 2009, and both were signed by Carolyn A. Taylor,
as substitute trustee. Each notice included a notice of substitute trustee’s sale that was marked:
“EXECUTED in multiple originals on June 15, 2009,” and signed by “Carolyn A. Taylor, Substitute
Trustee.” However, Taylor was not appointed as a substitute trustee until June 10, 2009. The notice
of substitute trustee’s sale stated the foreclosure sale would occur on July 7, 2009. Shine Bright
Acquisitions, L.L.C. purchased the property for $68,352.19 at the foreclosure sale.
The Bernals filed suit alleging, among other causes of action, a wrongful foreclosure claim.
The Bernals also sought a temporary injunction to prevent eviction during the pendency of this
lawsuit. The trial court denied the application for temporary injunction and found:
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1. The Court finds that a gross disparity exists between the bid price and the fair
market value of the property.
2. The Court further finds that the plaintiffs have been unable to plead or prove any
irregularity in the conduct of the foreclosure sale, and the Court on its own review
has been unable to find any irregularity.
3. The Court further finds that the actions of the substitute trustee have been ratified
by her appointment.
4. The Court finds that the plaintiffs’ application for a temporary injunction should
be DENIED.
The Bernals appeal the trial court’s order denying them injunctive relief.
DISCUSSION
To obtain a temporary injunction, the applicant must plead and prove three specific elements:
(1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a
probable, imminent, and irreparable injury in the interim. Butnaru v. Ford Motor Co., 84 S.W.3d
198, 204 (Tex. 2002). The decision to grant or deny a temporary injunction is within the sound
discretion of the trial court. Id. We reverse an order denying injunctive relief only when the trial
court abuses its discretion. Id. The test for abuse of discretion is whether the court acted without
reference to any guiding rules or principles. Low v. Henry, 221 S.W.3d 609, 619-20 (Tex. 2007).
The Bernals contend that Taylor had no actual authority to accelerate the note and send the
statutory notices until June 10, 2009. They argue this was an irregularity in the foreclosure sale,
which when coupled with the inadequate consideration, rendered the sale void.
To void a foreclosure sale because of inadequate consideration, there must be evidence there
was an irregularity in the sale. Am. Sav. & Loan Ass’n v. Musick, 531 S.W.2d 581, 587 (Tex. 1975);
Powell v. Stacy, 117 S.W.3d 70, 75 (Tex. App.—Fort Worth 2003, no pet.); Sanders v. Shelton, 970
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S.W.2d 721, 726 (Tex. App.—Austin 1998, pet. denied). The irregularity must have caused or
contributed to the grossly inadequate sale price. Musick, 531 S.W.2d at 587; Powell, 117 S.W.3d
at 75; Sanders, 970 S.W.2d at 726. The threshold issue is whether there were any irregularities in
the sale of the Bernals’ home. Powell, 117 S.W.3d at 75; Charter Nat’l Bank-Houston v. Stevens,
781 S.W.2d 368, 372 (Tex. App.—Houston [14th Dist.] 1989, writ denied).
As a general rule a substitute trustee has no power to act prior to her appointment. Univ. Sav.
Ass’n v. Springwoods Shopping Ctr, 644 S.W.2d 705, 706 (Tex. 1982); Slaughter v. Qualls, 139
Tex. 340, 162 S.W.2d 671, 675 (1942). However, a trustee’s actions after she is appointed ratify and
affirm prior acts. See Chandler v. Guar. Mortgage Co., 89 S.W.2d 250, 254 (Tex. App.—San
Antonio 1935, no writ); Wilson v. Armstrong, 236 S.W. 755, 760 (Tex. Civ. App.—Beaumont 1921,
no writ)(on rehearing). In Wilson, the deed of trust imposed a duty on the substitute trustee to give
notice of sale and post the notices. Wilson, 236 S.W. at 760. However, the trustee signed and posted
the notices before he was appointed. Id. The court stated:
The signing and posting of notices of sale are ministerial acts, and do not involve the
exercise of discretion. Whether [the trustee] signed the notices of sale before he was
formally designated as substitute trustee or after his designation, at the time when he
posted them, as required by the deed of trust, and by his act in posting them, he
ratified and affirmed his prior act of signing the notices, and recognized it as his
present act, as of date of posting, as fully as if he had erased his signature from the
notices and re-signed them. To hold otherwise would require a substitute trustee, who
had signed notices of sale prior to his formal designation as such substitute trustee,
to do the foolish thing of erasing his name from the notices of sale and re-signing
them.
Id.
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In Chandler, the notice of sale was published by the substitute trustee ten days before the
original trustee refused to act and the substitute was appointed. Id. Relying on Wilson, this court
stated:
In that state of facts, the presumption will be indulged that the posting of notice was
made by the substitute trustee after his appointment. Moreover, even if his
appointment was made after posting the notices, his subsequent acts under the
appointment had the effect of ratifying and affirming his prior acts as substitute
trustee.
Id.
Taylor sent notices of acceleration and of the substitute trustee’s sale on May 27 and June
1, 2009. The notices of the substitute trustee’s sale were postdated for June 15, 2009 and Taylor was
appointed as substitute trustee on June 10, 2009. The trial court found Taylor’s actions before her
appointment were ratified by her appointment, and there was no irregularity in the sale. Based on
Wilson and Chandler, we can not say the trial court acted without reference to any guiding rules or
principles in finding there was no irregularity in the sale. See Chandler, 89 S.W.2d at 254; Wilson,
236 S.W. at 760; see also Benser v. G.E. Capital Mortgage Servs., Inc., 05-93-00995, 1994 WL
156245, *4 (Tex. App.—Dallas Oct. 20, 1994, writ denied) (“when a party appoints the substitute
trustee after the substitute trustee posted the notices of foreclosure, his later acts under the
appointment ratify and affirm his prior acts as substitute trustee.”). We hold the trial court did not
abuse its discretion in denying the Bernals a temporary injunction.1 See Low, 221 S.W.3d at 619-20.
Steven C. Hilbig, Justice
1
… Additionally, the Bernals did not present any evidence that the alleged irregularity caused or contributed
to the grossly inadequate sale price. See Musick, 531 S.W .2d at 587; Powell, 117 S.W .3d at 75; Sanders, 970 S.W .2d
at 726. The Bernals must show the irregularity in the sale contributed to the inadequate sale price in order for the sale
to be void. See Musick, 531 S.W .2d at 587; Powell, 117 S.W .3d at 75; Sanders, 970 S.W .2d at 726.
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