Karl B. Bailey v. MidFirst Bank ( 2015 )

ACCEPTED
03-14-00632-CV
3771129
THIRD COURT OF APPEALS
AUSTIN, TEXAS
1/14/2015 3:40:26 PM
JEFFREY D. KYLE
CLERK
No. 03-14-00632-CV
FILED IN
3rd COURT OF APPEALS
In The Court of Appeals AUSTIN, TEXAS
For the Third District Court of Appeals 1/14/2015 3:40:26 PM
Austin, Texas JEFFREY D. KYLE
Clerk
KARL B. BAILEY
Appellant,
v.
MIDFIRST BANK
Appellees.
ON APPEAL FROM THE 250TH JUDICIAL DISTRICT COURT, TRAVIS COUNTY, TEXAS
TRIAL COURT CAUSE NO. D-1-GN-14-002430
APPELLANT’S BRIEF
WILLIAM B. GAMMON, SBN: 07611280
ANTHONY G. READ, SBN: 24056184
GAMMON LAW OFFICE, PLLC.
1201 Spyglass Drive, Suite 100
Austin, Texas 78746
Phone: 512-444-4529
Fax: 512-545-4279
Firm@GammonLawOffice.com
COUNSEL FOR APPELLANT
ORAL ARGUMENT REQUESTED
No. 03-14-00632-CV
In The Court of Appeals
For the Third District Court of Appeals
Austin, Texas
KARL B. BAILEY
Appellant,
v.
MIDFIRST BANK
Appellee.
ON APPEAL FROM THE 250TH JUDICIAL DISTRICT COURT, TRAVIS COUNTY, TEXAS
TRIAL COURT CAUSE NO. D-1-GN-14-002430
APPELLANT’S BRIEF
WILLIAM B. GAMMON, SBN: 07611280
ANTHONY G. READ, SBN: 24056184
GAMMON LAW OFFICE, PLLC.
1201 Spyglass Drive, Suite 100
Austin, Texas 78746
Phone: 512-444-4529
Fax: 512-545-4279
Firm@GammonLawOffice.com
COUNSEL FOR APPELLANT
ORAL ARGUMENT REQUESTED
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 2 OF 34
IDENTITY OF PARTIES AND COUNSEL
Appellant: Appellant’s Counsel:
Karl B. Bailey WILLIAM B. GAMMON, SBN: 07611280
ANTHONY G. READ
GAMMON LAW OFFICE, PLLC.
1201 Spyglass Drive, Suite 100
Austin, Texas 78746
Phone: 512-444-4529
Fax: 512-545-4279
Firm@GammonLawOffice.com
Appellee: Appellee’s Counsel:
MidFirst Bank CHRIS H. POCHYLA, SBN: 24032842
BARRETT DAFFIN FRAPPIER TURNER &
ENGEL, LLP
15000 Surveyor Boulevard, Suite 100
Addison, Texas 75001
Telephone: 972-340-7955
Facsimile: 972-341-0734
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 3 OF 34
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL ............................................3
TABLE OF CONTENTS............... ……………………………................4
TABLE OF AUTHORITIES .....................................................................6
STATEMENT OF THE CASE ..................................................................9
RECOMMENDATION ON ORAL ARGUMENT ...............................10
ISSUES PRESENTED ..............................................................................11
STATEMENT OF THE FACTS .............................................................12
SUMMARY OF THE ARGUMENT .....................................................15
ARGUMENT AND AUTHORITIES ......................................................17
I. Midfirst's Traditional Motion for Summary Judgment……….17
A. Standard of Review- Tex. R. Civ. P. 166a…………..…..17
B. The Trial Court’s Summary Judgment is in Error
Because Bailey has Standing to Bring his Claims as
Successor, Assignee Bound and Benefitted by the Deed of
Trust or a Person with an Interest in the Property……….18
C. Bailey has Standing to Challenge The Assignment to
MidFirst Bank ……………....…….……….………..……....20
D. The Trial Court's Judgment is in Error Because Bailey
was Entitled to Notice of the Foreclosure Sale by
Statute……………………….……………………………….21
E. The Trial Court's Judment is in error Because There are
Genuine Issues of Material Fact as to When MidFirst Bank
Knew of the SPP Deed and the Bailey
Deed………………………………………………………….22
F. Bailey has a Cause of Action for Breach of Contract….24
G. Bailey's Claim for Void Foreclosure is Supported by
Evidence……………………………………………………24
BAILEY V. MIDFIRST BANK
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H. Bailey's Quite Title Claim Raises Material Fact
Issues…………………………………………………………25
II. Midfirst Bank's No-Evidence Motion for Summary
Judgment…………………………………………………….26
A. Standard of Review- Tex. R. Civ. P. 166a……………….26
B. Bailey is Entitled to Equitable Estoppel/Unjust
Enrichment…………………………………………………..27
C. Bailey Provided More Than a Scintilla of Proof to Support
Breach of Contract, Void Foreclosure and Quiet Title
Claims………………………………………………………..28
III. Midfirst Bank's Motion for Summary Judgment on its
Counterclaims……………………………………………….29
A. Standard of Review- Tex. R. Civ. P. 166a……………29
B. MidFirst Bank's Request for Declaratory Judgment is
Improper…………………………………………………….30
C. This Suit Does Not Support a Writ of Possession
Counterclaim……………………………………………….31
IV. Bailey's Motion for Summary Judgment MidFirst Bank's
Counterclaims……………………………………………….32
PRAYER ....................................................................................................33
CERTIFICATE OF COMPLIANCE .....................................................33
CERTIFICATE OF SERVICE………………………………………...34
APPENDIX ...............................................................................................35
BAILEY V. MIDFIRST BANK
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TABLE OF AUTHORITIES
Cases
Acevedo v. Stiles, 2003 Tex. App. LEXIS 3854 (Tex. App.— San Antonio 2003, pet.
denied)…………………………………………………………………………..32
American Savings & Loan Assoc. v. Musick, 531 S.W.2d 581, 586 (Tex. 1976)...19
Aurora Petroleum, Inc. v. Cholla Petroleum, Inc., 2011 Tex. App. LEXIS 1382, 8-
9 (Tex. App. – Amarillo 2011, no pet.)…………………………………………27
Austin v. Countrywide Home Loans, 261 S.W.3d 68 (Tex. App.—Houston [1st
Dist.] 2008, pet. denied)………………………………………………………...21
Boudreau v. Fed. Trust Bank, 115 S.W.3d 740, 743 (Tex. App.—Dallas 2003, pet.
denied)……………………………………………………………………….……30
City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005)………………..….….29
Estelle v. Hart, 55 S.W.2d 510, 513 (Tex. Comm'n App. 1932, no writ)………...19
Ford v. Exxon Mobil Chem. Co., 235 S.W.3d 615, 617 (Tex. 2007)…………..…23
Glass v. Carpenter, 330 S.W.2d 530, 537 (Tex. Civ. App.—San Antonio 1959,
writ ref’d n.r.e.)……………………………………………………………….…..20
Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007)…….. 26
Goswami v. Metropolitan Sav. & Loan Asso., 751 S.W.2d 487, 489 (Tex. 1988)..19
Heldenfels Bros. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992)…….27
Howell v. Murray Mortgage Co., 890 S.W.2d 78, 84 (Tex. App. Amarillo 1994,
rehearing overruled)……………………………………………………………....18
John Chezik Buick Co. v. Friendly Chevrolet Co., 749 S.W.2d 591, 594 (Tex. App.
— Dallas 1988, writ denied)………………………………………………………30
Johnson v. Hewitt, 539 S.W.2d 239, 240-241 (Tex. Civ. App. — Houston [1st Dist.]
1976, no writ)…………………………………………………………………….30
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
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Joseph v. City of Ranger, 188 S.W.2d 1013, 1014 (Tex. Civ. App. — Eastland 1945,
writ ref'd w.o.m.)………………………………………………………………….30
Kansas Reinsurance Co. v. Congressional Mortgage Corp., 20 F.3d 1362, 1370
(5th Cir. Tex. 1994)…………………………………………………………….23
King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750 (Tex. 2003)………………..26
Leavings v. Mills, 175 S.W.3d 301 (Tex. App.— Houston [1st Dist.] 2004, no
pet.)………………………………………………………………………………..21
Limestone Prods. Distrib., Inc. v. McNamara, 71 S.W.3d 308, 311 (Tex. 2002)...30
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848
(Tex. 2009)……………………………………………………..……………17,29
Martin v. New Century Mortgage Co., 2012 Tex. App. LEXIS 4705 (Tex. App.—
Houston [1st Dist.] 2012, no pet.)………………………………….…………20, 21
MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986)…………………..……..18, 29
Mooney v. Harlin, 622 S.W.2d 83, 85 (Tex. 1981)……………………………….23
Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985)………17, 29, 30
Priesmeyer v. Pacific Southwest Bank, F.S.B., 917 S.W.2d 937 (Tex.App.—Austin
1996, no pet.)……………………………………………………………………20
Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-216
(Tex. 2003)………………………………………………………………………..17
Reinagel, et al. v. Deutsche Bank Nat’l Trust Co., No. 12-50569, 2013 U.S. App.
LEXIS 14089 (5th Cir. (Tex.) July 11, 2013)………………………………….20
Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999)………………...30
Shepard v. Boone, 99 S.W.3d 263 (Tex. App.—Eastland 2003, no pet.)…………21
Stanley v. Citifinancial Mortg. Co., 121 S.W.3d 811, 817 (Tex. App. — Beaumont
2003)……………………………………………………………………………..25
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
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Tipps v. Chinn Exploration Co., 2014 Tex. App. LEXIS 10061 (Tex. App.—
Texarkana Sept. 5, 2014, pet. filed)……………………………………………...26
Tri-Cities Const., Inc. v. American Nat. Ins. Co., 523 S.W.2d 426, 430 (Tex. Civ.
App.—Houston [1st Dist.] 1975, no writ)……………………………………..20
Vazquez v. Deutsche Bank Nat'l Trust Co., N.A., 441 S.W.3d 783, 790 (Tex.
App.— Houston [1st Dist.] 2014, no pet. hist.)………………………………..21
Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 908 (Tex. 1982)…22
Wolf v. Highland Haven Prop. Owners Ass'n, 2013 Tex. App. LEXIS 10912 (Tex.
App.— Austin Aug. 29, 2013, pet. denied)…………………………………….23
Statutes and Rules
7 Tex. Admin Code § 65.3 (21) .............................................................................. 13
Tex. Prop. Code § 51.002 ........................................................................................25
Tex. Prop. Code § 51.002(b) ....................................................................................21
Tex. R. Civ. P. 166a .......................................................................................... 17, 26
Tex. R. Civ. P. 166a(c)……………………………………….…………...17, 29, 32
Tex R. Civ. P. 310 ....................... …………………………………………12, 17, 31
Other
Black's Law Dictionary 1444 (West 1979)……………..………………………...32
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 8 OF 34
STATEMENT OF THE CASE
1.01 Karl B. Bailey made ALL of his mortgage payments, but was nonetheless
foreclosed upon. This is a void foreclosure case. Karl B. Bailey’s causes of
action are breach of contract, void foreclosure, violation of the DTPA and
quiet title. (CR 13-18). Plaintiff also seeks equitable estoppel and claims
against unjust enrichment. Defendant MidFirst Bank’s counterclaims are for
declaratory judgment and a writ of possession. (CR 19-23.)
1.02 Trial court is the 250th District Court of Travis County, the Honorable John
K. Dietz then presiding. The ruling in the case was made by visiting judge
the Honorable Gus Strauss.
1.03 The claims and counterclaims between Karl B. Bailey and Defendant MidFirst
Bank were resolved on dueling summary judgment motions. (Appendix C, D.)
1.03 The trial court denied Plaintiff’s summary judgment motion and granted
Defendant MidFirst Bank’s summary judgment motion. (Appendix A, CR 24-
25.)
1.04 On Plaintiff’s motion, the claims and counterclaims between Plaintiff and
Defendant MidFirst Bank were severed to render the ruling on the motions for
summary judgment appealable. (Appendix B, CR 28).
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
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RECOMMENDATION ON ORAL ARGUMENT
Bailey suggests that the issues presented should not be determined on the
record alone and that oral argument is necessary. The issues presented have become
sufficiently muddled by misinterpretation and the law sufficiently misapplied that
oral argument would benefit the panel.
/s/ Anthony G. Read
Anthony G. Read
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 10 OF 34
TO THE HONORABLE THIRD DISTRICT COURT OF APPEALS:
Appellant, Karl B. Bailey, pleads that this honorable Court of Appeals reverse
the judgment of the visiting judge in the 250th Judicial District Court and remand
this case for further proceedings.
ISSUES PRESENTED
2.01 Is Bailey bound and benefited by the covenants and agreements of the Deed
of Trust signed by Amy and Travis Chestnut by virtue of succession, assignment or
interest in the property? Does Bailey therefore have standing to bring claims against
MidFirst Bank?
2.02 Did the trial court err in determining Bailey did not have standing to
specifically challenge the Assignment to MidFirst Bank?
2.03 Did the trial court err in determining Karl B. Bailey was not entitled to
receive notice of the foreclosure sale under either the statutory provisions, the
Chestnut Deed of Trust, public policy or equity?
2.04 Did the trial court err in determining no genuine issue of material fact existed
regarding MidFirst Bank’s knowledge of subsequent deeds and when it occurred?
2.05 Did the trial court err in denying Karl B. Bailey’s Breach of Contract claim
by finding he did not have standing?
2.06 Did the trial court err in denying Karl B. Bailey’s Void Foreclosure Claim
when he did not receive statutory notice?
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
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2.07 Did the trial court err in denying Karl B. Bailey’s Quiet Title claim when there
were issues of material fact?
2.08 Did the trial court err in granting no-evidence summary judgment on Karl B.
Bailey’s Equitable Estoppel/Unjust Enrichment Claim?
2.09 Did the trial court err in granting no-evidence summary judgment on Karl B.
Bailey’s Breach of Contract, Void Foreclosure and Quiet Title claims?
2.10 Did the trial court err in granting MidFirst Bank declaratory judgment? Was
the declaratory judgment in violation of the applicable statute as it raised an issue
already before the trial court?
2.11 Did the trial court err in granting a writ of possession under TEX. R. CIV. P.
310 when the plain language of the Rule states TRCP 310 applies to suits seeking
foreclosure when this was not a suit seeking foreclosure?
STATEMENT OF THE FACTS
3.01 Karl B. Bailey (“Bailey”) purchased a homestead using creative financing
foisted upon him by Eric Lee (“Lee”) and Smoke Signal Pass, LLC (“SSP”). This
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
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transaction is known as a “Wally Wrap” 1 or Wrap-around real estate loan.2 From
the time he purchased the Property until he received a surprise Demand to Vacate,
Mr. Bailey dutifully made ALL of his payments. (Appendix D)
3.02 The property in question is commonly known as 1234 Acanthus Street,
Pflugerville, Travis County, Texas 78660 (the Property) and is more particularly
described in Appendix C, Exhibit 2-A-1.
3.03 On July 15, 2004, the Property was purchased by Travis Chestnut and Amy
Chestnut (the Chestnuts), using funding from lender Alethes, LLC. The Chestnuts
executed a Deed of Trust which was recorded in the Travis County Property Records
as document 2004136582 (Chestnut Deed). (Appendix C, Exhibit 2-A-1.)
3.04 On April 22, 2009, a purported assignment of the Chestnut Deed to MidFirst
Bank (MFB) was recorded in the Travis County Property Records as document
2009079593 (MFB Assignment). (Appendix C, Exhibit 2-A-3.) The MFB
assignment was executed by Mortgage Electronic Registration Systems, Inc.
1
A “Wally Wrap” system was designed roughly twenty (20) years ago as a secondary financing
tool for the purchase of real property. According to WALLY TINGLEY & ASSOCIATES., P.C., “a
seller provides buyer non-qualifying interim purchase wrap financing for 1 – 5 years (balloon
period), stacking the wrap financing on seller’s prior mortgage.”
http://wallytingley.com/wallywrap/. Essentially, the seller is providing the buyer a “junior”
mortgage which “wraps” around and exists in addition to any “senior” mortgages securing the
property in question. This “junior” mortgage provides financing for a minimum of five years.
The buyer usually makes a down payment and pays off both the agreed upon financing and
seller’s existing mortgage within that five year period. This “interim” financing: is used by a
buyer to own the property in question and sell, or refinance into a mortgage loan.
2
“Wrap-around real estate loan--A financing device whereby a junior mortgage lien secures a
liability consisting of the amount of senior debt, plus any additional funds advanced to the
borrower.” 7 TEX. ADMIN CODE § 65.3(21).
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 13 OF 34
(MERS) as “nominee” for the original lender, Alethes, LLC. The MERS assignment
claimed to assign to MFB the negotiable Promissory Note and the lien interest.
3.05 At some point, the Promissory Note was endorsed by Alethes, LLC (not
MERS) to GMAC Bank. (Appendix B, Exhibit A-2.) GMAC Bank endorsed the
Note to GMAC Mortgage Corporation which endorsed the Note to MFB.
3.06 On July 30, 2009, the Chestnuts executed a General Warranty Deed to SSP
which was recorded in the Travis County Property Records as document 200913692
(SPP Deed). (Appendix C, Exhibit A-4.)
3.07 On July 31, 2009, SPP executed a Special Warranty Deed with Vendor’s Lien
to Bailey (and his wife Rebecca) which was recorded in the Travis County Property
Records as document 2009135933 (Bailey Deed). (Appendix C, Exhibit A-4.) The
wraparound transaction meant Bailey made his payments to SPP and SPP would
ensure MFB was paid. SPP charged an amount greater than the payment to MFB
which it kept as profit.
3.08 Bailey began making the required payments to SSP and continued to do so
until he received a Demand to Vacate from MFB on February 14, 2011.
(Appendix D, Exhibit 6.)
3.09 It is uncontested MFB did not provide contractual or statutory notice to Bailey
prior to the foreclosure. (Appendix C, ¶8.) MFB sent notices to the Chestnuts.
BAILEY V. MIDFIRST BANK
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CAUSE NO.: NO. 03-14-00632-CV
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3.10 On May 8, 2009, MFB filed an Appointment of Substitute Trustee in the
Travis County Property Records, dated November 5, 2010 which was recorded as
document 20101892473. (Appendix C, Exhibit 5.) This document was filed after the
SPP Deed and the Bailey Deed.
3.11 On November 15, 2010, MFB, through its purported servicer Midland
Mortgage Co. (MMC), filed a Notice of Substitute Trustee Sale as document
2010001061513 in the Travis County Property Records. (Appendix C, Exhibit B-
1.)
3.12 On January 4, 2011, MMC conducted a foreclosure sale. (Appendix C, Exhibit
B-2.)
SUMMARY OF THE ARGUMENT
4.01 Bailey was an innocent victim in this transaction. SPP sold him the Property
and took his payments. Bailey made each and every payment he was required to
make until he received a Demand to Vacate indicating MFB had foreclosed on the
Property. Bailey had no way of knowing SPP was keeping his payments and not
forwarding them to MFB as required. MFB, on the other hand, was charged with
knowledge of recordings in the property records and therefore knew of the SPP and
Bailey’s Deed and would have known Bailey was the entity making payments.
4.02 Bailey attempted to work with MFB to take over the Chester Deed of Trust
and resume payments. MFB would not agree to such an arrangement which would
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
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have ended this controversy and ensured MFB was paid all it was due.
4.03 The foreclosure was void because MFB did not have requisite authority to
conduct or to order the sale conducted. Further, MFB did not give Bailey the
statutory notice of foreclosure.
4.04 The trial court erred in granting summary judgment when genuine issues of
material fact existed as to when MFB knew of the SPP Deed and Bailey Deed. This
genuine issue of material fact is determinative of Bailey’s rights under all three
deeds. Specifically, Bailey’s rights a successor or assignee, privity with MFB or an
interest in the property and whether he was entitled to notice of default, notice of
acceleration and notice of sale.
4.05 The trial court erred in determining Bailey did not have standing to challenge
the void foreclosure and the void assignment.
4.06 The trial court erred in denying Bailey’s Void Foreclosure Claim as there exist
genuine issues of material fact as to who holds superior title to the subject property
and the impact of the execution of the wraparound.
4.07 The trial court erred in finding no evidence for Bailey’s quiet title and void
foreclosure claims.
4.07 The trial court erred in not finding equitable estoppel/unjust enrichment since
Bailey made all payments and MFB was the beneficiary of a number of those
payments.
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
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4.08 The trial court erred in granting declaratory judgment for MFB since the issues
were already before the trial court in Bailey’s claims. Declaratory judgment is not
available on claims that have already been raised in the suit.
4.09 The trial court erred in granting a writ of possession under TEX. R. CIV. P.
310 in violation of the plain language of the Rule.
ARGUMENT AND AUTHORITIES
I. MIDFIRST’S TRADITIONAL MOTION FOR SUMMARY JUDGMENT
A. STANDARD OF REVIEW- TEX. R. CIV. P. 166A.
5.01 A trial court’s decision to grant summary judgment is reviewed de novo using
the standards for summary judgment set forth in Tex. R. Civ. P. 166a. Provident
Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215-216 (Tex. 2003). In
reviewing a grant of summary judgment, a court of appeals must determine whether
the successful movant carried its burden of demonstrating that there is no genuine
issue of material fact and that it is entitled to judgment as a matter of law. TEX. R.
CIV. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d
844, 848 (Tex. 2009); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.
1985). In making this decision, a court of appeals takes all evidence favorable to the
non-movant as true, and make every reasonable inference in favor of the non-
movant, resolving all doubts in his or her favor. Provident Life & Accident Ins. Co.,
128 S.W.3d at 215. Where defendant-movant seeks summary judgment on an
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
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affirmative defense, it must prove conclusively all elements of that defense. MMP,
Ltd. v. Hones, 710 S.W.2d 59, 60 (Tex. 1986).
B. THE TRIAL COURT’S JUDGMENT IS IN ERROR BECAUSE BAILEY HAS
STANDING TO BRING HIS CLAIMS AS SUCCESSOR, ASSIGNEE BOUND AND
BENEFITED BY THE DEED OF TRUST OR
A PERSON WITH AN INTEREST IN THE PROPERTY.
6.01 Section 12 of the Chestnut Deed states: “The covenants and agreements of
this Security Agreement shall bind and benefit the successors and assigns of Lender
and Borrower, subject to the provisions of Paragraph 9(b).” 3 (Appendix C, Exhibit
A.)
6.02 This is analogous to Bank A loaning money for a house to Homeowner B
under a Deed of Trust. Homeowner B then sells the house to Homeowner C. When
B or C defaults, C is bound and benefited as a successor or assign under Section 12
of the Deed of Trust in that Bank A has the right to foreclose and take the Property
from Homeowner C despite no direct contract. This is so because Homeowner C is
bound and benefited by the Deed of Trust as a successor or assign. See, Howell v.
Murray Mortgage Co., 890 S.W.2d 78, 84 (Tex. App. Amarillo 1994, rehearing
overruled) (stating “when the term successor is used in common parlance it means
anyone who follows. However, when used as a legal term applying to . . . natural
persons, [it] is [an] apt and appropriate term to designate one to whom property
3
Paragraph 9(b) is the “due on sale clause” which was not invoked.
BAILEY V. MIDFIRST BANK
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descends or [the] estate of decedent.” and finding the person to whom the property
descended was a successor bound by the terms of the Deed of Trust).
6.03 Bailey is also a successor or assign to the Chestnut Deed because it gives MFB
the right to foreclose on property owned by Bailey.
6.04 Alternatively, Bailey has standing to challenge the foreclosure as an interested
party.
6.05 Appellee cites Goswami v. Metropolitan Sav. & Loan Asso., 751 S.W.2d 487,
489 (Tex. 1988) for the proposition that “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.”
6.06 Even if Bailey is not a successor or assignee of the Chestnut Deed, Goswami,
in the same paragraph cited above, points out that “when the third party has a
property interest, whether legal or equitable, that will be affected by such a sale, the
third party has standing to challenge such a sale to the extent that its rights will be
affected by the sale.” citing American Savings & Loan Assoc. v. Musick, 531 S.W.2d
581, 586 (Tex. 1976); Estelle v. Hart, 55 S.W.2d 510, 513 (Tex. Comm'n App. 1932,
no writ). Goswami 751 S.W.2d at 489.
6.07 Bailey had both legal and equitable interest in the Property. He had a Deed
and was faithfully making monthly payments. The void sale of the Property by MFB
affected Bailey’s rights. Therefore, alternatively, Bailey has standing to challenge
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
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the foreclosure since he has a property interest.
6.08 Bailey had no opportunity to challenge the foreclosure sale because he was
not aware of any default. He was an innocent party and was making his payments
as required by his agreement with SPP. SPP was charged with getting the payments
to MFB.
C. BAILEY HAS STANDING TO CHALLENGE THE ASSIGNMENT TO MIDFIRST
BANK.
7.01 As discussed supra, Bailey has standing with regard to the Chester Deed as
a successor or assign or, alternatively, as a party with an interest in the property.
7.02 Texas law follows the common law rule where a debtor may bring any
ground against an assignee to challenge an assignment as void or invalid. See Tri-
Cities Const., Inc. v. American Nat. Ins. Co., 523 S.W.2d 426, 430 (Tex. Civ. App.—
Houston [1st Dist.] 1975, no writ); Glass v. Carpenter, 330 S.W.2d 530, 537 (Tex.
Civ. App.—San Antonio 1959, writ ref’d n.r.e.). This was recently acknowledged
by the Federal 5th Circuit, and is the majority rule followed in Texas. See, Reinagel,
et al. v. Deutsche Bank Nat’l Trust Co., No. 12-50569, 2013 U.S. App. LEXIS 14089
(5th Cir. (Tex.) July 11, 2013) (reversing district court, Hon. Sam Sparks, on this
point of law).
7.03 Texas Courts also permit challenging the chain of assignments regarding the
right of a party to foreclose. See, Priesmeyer v. Pacific Southwest Bank, F.S.B., 917
S.W.2d 937 (Tex.App.—Austin 1996, no pet.); see, also, Martin v. New Century
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 20 OF 34
Mortgage Co., 2012 Tex. App. LEXIS 4705 (Tex. App.—Houston [1st Dist.] 2012,
no pet.); Austin v. Countrywide Home Loans, 261 S.W.3d 68 (Tex. App.—Houston
[1st Dist.] 2008, pet. denied); Leavings v. Mills, 175 S.W.3d 301 (Tex. App.—
Houston [1st Dist.] 2004, no pet.); Shepard v. Boone, 99 S.W.3d 263 (Tex. App.—
Eastland 2003, no pet.).
7.04 The right to challenge an assignment was very recently upheld in Vazquez v.
Deutsche Bank Nat'l Trust Co., N.A., 441 S.W.3d 783, 790 (Tex. App.— Houston
[1st Dist.] 2014, no pet. hist.). Bailey, like Vasquez, alleges the assignment to MFB
was void and therefore the trial court should not have granted summary judgment
that he lacked standing.
D. THE TRIAL COURT’S JUDGMENT IS IN ERROR BECAUSE BAILEY WAS
ENTITLED TO NOTICE OF THE FORECLOSURE SALE BY STATUTE
8.01 As discussed supra, Bailey is bound and benefited by the Chestnut Deed as
a successor or assign. Consequently, Bailey was entitled to the benefit of the
Chestnut Deed, section 18.
8.02 The Chestnut Deed, section 18, requires Lender to “mail a copy of the notice
of sale to Borrower in the manner prescribed by applicable law.” Applicable law,
TEX. PROP. CODE 51.002(b) requires the notice be sent by certified mail.
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 21 OF 34
8.03 It is undisputed no such notice was sent to Bailey. (Appendix C, Exhibit ¶8.)
8.04 Bailey was also entitled to notice of the sale as a matter of public policy and
equity. MFB was either aware or charged with awareness of the Bailey Deed and
knew Bailey had an interest in the property. The public policy reason for notice
under the statutes and case law (and Deed of Trust) is to allow property owners to
cure defaults and prevent foreclosure. Allowing Mortagees to deny property owners
notification prevents property owners from taking any action to prevent foreclosure.
This contravenes the public policy of reducing foreclosures and ensuring that
contracts are voluntarily and knowingly complied with, rather than breached and not
cured.
8.05 Equity also dictates Bailey receive advance notice of the foreclosure. MFB
benefited from Bailey’s payments. Bailey has an interest in the property. Allowing
MFB to retain Bailey’s payments and gain any equity in the property unjustly
enriches MFB and the expense of an innocent party – Bailey.
E. THE TRIAL COURT’S JUDGMENT IS IN ERROR BECAUSE THERE ARE GENUINE
ISSUES OF MATERIAL FACT AS TO WHEN MIDFIRST BANK KNEW OF THE SPP
DEED AND THE BAILEY DEED.
9.03 MFB is charged by Texas Law with knowledge of the contents of the property
records regarding its property. Westland Oil Dev. Corp. v. Gulf Oil Corp., 637
S.W.2d 903, 908 (Tex. 1982) (“it is well settled that ‘a purchaser is bound by every
recital, reference and reservation contained in or fairly disclosed by any instrument
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 22 OF 34
which forms an essential link in the chain of title under which he claims.’") (internal
cites omitted).4 Mooney v. Harlin, 622 S.W.2d 83, 85 (Tex. 1981) (“Constructive
notice in law creates an irrebuttable presumption of actual notice.).
9.04 It can be argued property owners are not bound to periodically search the
property records to ensure nothing unexpected is filed.5 However, since MFB filed
an appointment of substitute trustee on December 7, 2010, they would be charged
with knowledge of the SPP Deed and Bailey Deed since both were on file since 2009
which was prior to the December 7, 2010 filing date of the appointment of substitute
trustee. Further, MFB had a duty to determine whether other liens existed on the
property including tax and mechanics liens.
9.05 MFB is charged with knowledge of the SPP Deed and Bailey Deed from
December 7, 2010. This means MFB was aware Bailey had an interest in the
property and was required to be notified of default, acceleration and sale. The
affidavit of MFB’s First Vice President, Thad Burr, indicated the SPP Deed and
Bailey Deed were unknown to MFB when filed. He did not address the genuine
4
See also: Wolf v. Highland Haven Prop. Owners Ass'n, 2013 Tex. App. LEXIS 10912 (Tex.
App.— Austin Aug. 29, 2013, pet. denied) “…we note that appellants are charged with
constructive notice of the actual knowledge of the Subject Property's ownership they could have
acquired by examining the Burnet County public records.” See Ford v. Exxon Mobil Chem. Co.,
235 S.W.3d 615, 617 (Tex. 2007) (per curiam) (‘While not all public records establish an
irrebuttable presumption of notice, the recorded instruments in a grantee's chain of title generally
do.’).have been acquired by examining public records.’)”.
5
Kansas Reinsurance Co. v. Congressional Mortgage Corp., 20 F.3d 1362, 1370 (5th Cir. Tex.
1994)
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 23 OF 34
material issue of fact as to when MFB found out about the deeds.
F. BAILEY HAS A CAUSE OF ACTION FOR BREACH OF CONTRACT.
10.01 As discussed supra, Bailey is a successor to the Chestnut Deed of Trust.
10.02 The Chestnut deed is a valid contract, Bailey tendered every payment
required of him until after foreclosure. (Appendix D, Exhibits 6 and 7, Affidavit
and Proof of Payments.) MidFirst breached the contract by not providing notice to
Bailey as admitted in paragraph 23 of MFB’s Amended MSJ. Bailey pled damages
of having a void foreclosure executed on his home. The lack of notice was a
violation of Section 18 of the Chester Deed.
G. BAILEY’S CLAIM FOR VOID FORECLOSURE IS SUPPORTED BY EVIDENCE.
11.01 The MFB assignment of the Note and Deed of Trust was void. (Appendix C,
Exhibit A-3.) The document purports to transfer both the Note and Deed of Trust
from Alethes, LLC via MERS as nominee to MFB. The assignment was executed
April 22, 2009. A conflict exists with the MFB assignment and the endorsements
on the Note.
11.02 The Note is endorsed by Alethes, LLC to GMAC Bank. (Appendix C, Exhibit
A-2.) One of two possible sequences of events render the MFB assignment and/or
Note endorsements invalid. If Alethes, LLC endorsed the Note to GMAC Bank
before the MFB assignment, MFB did not receive the Note as stated in the MFB
assignment as Alethes, LLC had endorsed it and no longer held it. Alternatively, if
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 24 OF 34
the MFB assignment occurred before the endorsement, the Alethes, LLC
endorsement to GMAC Bank was void because Alethes, LLC no longer held the
note.
11.03 Regardless, a material issue of fact exists as to whether the MFB assignment
is valid. This creates a material issue of fact as to whether MFB had authority to
direct the foreclosure as it did not own the Note.
11.04 Even if the MFB sale was not void for the reasons above, genuine issues of
material fact exist as to whether Bailey was entitled to notice under TEX. PROP. CODE
51.002. Bailey was a party to the Chestnut Deed through the Bailey and SSP Deeds.
Bailey was a person MFB knew or should have known was obligated to pay the debt.
This would have been in MFB’s records based on their knowledge of the property
records. Some cases indicate someone not a party to the Deed of Trust are not
entitled to notice.6 In the instant case, a genuine issue of material fact exists as to
whether Bailey was a successor or assign to the Chester Deed.
H. BAILEY’S QUIET TITLE CLAIM RAISES MATERIAL FACT ISSUES.
11.04 MFB first states Bailey’s Quiet Title claim fails and then discusses the
elements of a Trespass to Try Title Claim. (Appendix C, Exhibit ¶¶ 52-53.)
11.05 The elements of a Quiet Title Claim are: (1) an interest in a specific property,
(2) title to the property is affected by a claim by the defendant, and (3) the claim,
6 Stanley v. Citifinancial Mortg. Co., 121 S.W.3d 811, 817 (Tex. App. — Beaumont 2003).
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 25 OF 34
although facially valid, is invalid or unenforceable. Tipps v. Chinn Exploration Co.,
2014 Tex. App. LEXIS 10061 (Tex. App.— Texarkana Sept. 5, 2014, pet. filed).
11.06 Issues of material fact have been raised by Bailey on this claim. The Bailey
Deed shows an interest in a specific property, the Substitute Trustee’s Deed shows
a claim by MFB. (Appendix C, Exhibit B-2.)The void foreclosure, discussed supra,
demonstrates the claim, although facially valid, is invalid or unenforceable.
II. MidFirst Bank’s No-Evidence Motion for Summary Judgment
A. STANDARD OF REVIEW- TEX. R. CIV. P. 166a.
12.01 When a party moves for summary judgment on a no-evidence ground, the
court reviews the claim under the same legal sufficiency standard as directed
verdicts. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750 (Tex. 2003). Under
that standard, evidence is considered in the light most favorable to the non-movant.
Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 756 (Tex. 2007). The non-
movant is “not required to marshal [his] proof; [his] response need only point out
evidence that raises a fact issue on the challenged elements.” TEX. R. CIV. P. 166a.
A no-evidence summary judgment is improperly granted if the party responding
brings forth more than a scintilla of probative evidence to raise a genuine issue of
material fact. King Ranch, Inc. v. Chapman, 118 S.W.3d at 751.
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 26 OF 34
B. Bailey is Entitled to Equitable Estoppel/Unjust Enrichment
13.01 It must be remembered in the instant case Bailey was an innocent party in this
transaction. He paid each and every payment he was required to pay to SPP per the
Bailey Deed. The void foreclosure occurred without his knowledge. Once it did
occur, he attempted to resume payments with MFB. MFB declined to accept the
money.
13.02 When MFB became aware of the wraparound through the property records, it
also became aware it had been taking payments which originated from Bailey.
13.03 MFB cites Heldenfels Bros. v. City of Corpus Christi, 832 S.W.2d 39, 41
(Tex. 1992) for the proposition that unjust enrichment must entail a benefit obtained
by fraud, duress or taking of undue advantage. Actually, the case says a party may
recover under these circumstances.7 Heldenfels Bros. does not say these conditions
must occur. Other case law provides unjust enrichment in other circumstances. See,
e.g., Aurora Petroleum, Inc. v. Cholla Petroleum, Inc., 2011 Tex. App. LEXIS 1382,
8-9 (Tex. App. – Amarillo 2011, no pet.). 8
7
“A party may recover under the unjust enrichment theory when one person has obtained a
benefit from another by fraud, duress, or the taking of an undue advantage.” Heldenfels Bros.,
Inc. v. Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992) (emphasis added).
8
“Unjust enrichment is an equitable principle that is the result of a failure to make restitution of
benefits wrongfully or passively received under circumstances that give rise to an implied or
quasi-contractual obligation to repay… While it often applies when one person has obtained a
benefit from another by fraud, duress, or by taking an undue advantage… it is also available if a
contract is unenforceable, impossible, not fully performed, or void for other legal reasons …
Indeed, fraud is not a requisite component for a finding of unjust enrichment.” (internal cites
omitted).
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 27 OF 34
13.04 Bailey was current on his payments up until MFB’s void foreclosure.
(Appendix C, Exhibit 6 and 7.) MFB was aware at some point before the foreclosure
that Bailey was making the payments. Either when the source of the checks changed
from the Chestnuts to SPP or when MFB checked the property records in preparation
for foreclosure or when filing the assignment of substitute trustee. MFB continued
to foreclose knowing Bailey had made all payments. MFB was unjustly enriched by
the payments made by Bailey.
13.05 MFB is further estopped from asserting the foreclosure is valid in that MFB
knowingly received payments from Bailey, yet continued to foreclose on his
property.
C. Bailey Provided More Than a Scintilla of Proof to Support Breach of
Contract, Void Foreclosure and Quiet Title Claims.
14.01 As discussed supra, Bailey is a successor, assign or, alternatively, a party with
an interest to the Chestnut Deed of Trust. This demonstrates a valid, enforceable
contract exists with MFB. Consequently, more than a scintilla of evidence has been
provided establishing the contested element: existence of a valid, enforceable
contract.
14.02 Bailey has not pled wrongful foreclosure. Instead, Bailey pled the foreclosure
was void, ab initio and has provided more than a scintilla of evidence the Note and
Deed of Trust were not properly transferred to MFB and Bailey did not receive
notice of the sale to which he was entitled.
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 28 OF 34
14.03 MFB did not have standing to initiate or direct its servicer to initiate
foreclosure proceedings against Bailey as it was neither the owner nor holder of any
indebtedness secured by Bailey’s homestead.
14.04 MFB continues to address Bailey’s quiet title claim with the elements of a
trespass to try title claim. As discussed supra, Bailey has more than a scintilla of
evidence to support his quiet title claim.
III. MIDFIRST BANK’S MOTION FOR SUMMARY JUDGMENT ON ITS
COUNTERCLAIMS
A. STANDARD OF REVIEW- TEX. R. CIV. P. 166a.
15.01 To succeed on a traditional motion for summary judgment on its
counterclaim, the defendant must show that there is no genuine issue of material fact
and that it is entitled to summary judgment as a matter of law. Tex. R. Civ. P.
166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844,
848 (Tex. 2009); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985).
To meet this burden, the defendant must conclusively prove all essential elements of
its claim. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). A matter is
conclusively established if reasonable people could not differ on the conclusion to
be drawn from the evidence. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex.
2005). If the defendant establishes its right to summary judgment as a matter of law,
the burden shifts to the plaintiff to present evidence that raises a genuine issue of
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 29 OF 34
material fact. Boudreau v. Fed. Trust Bank, 115 S.W.3d 740, 743 (Tex. App.—
Dallas 2003, pet. denied). In deciding whether to grant defendant’s motion, the court
must take as true all competent evidence favorable to the plaintiff and indulge every
reasonable inference and resolve any doubts in the plaintiff’s favor. Limestone
Prods. Distrib., Inc. v. McNamara, 71 S.W.3d 308, 311 (Tex. 2002); Rhône-
Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999); Nixon, 690 S.W.2d at 548-
49.
B. MidFirst Bank’s Request for Declaratory Judgment is Improper
16.01 MFB moved for summary judgment on its counterclaim for Declaratory
Judgment, arguing that its motion had proven it had standing to foreclose. Because
Bailey has not brought an action under the Act, Movant is not permitted to bring
counterclaims under the Act. The Declaratory Judgment Act is not available to settle
disputes already pending before a court. Johnson v. Hewitt, 539 S.W.2d 239, 240-
241 (Tex. Civ. App. — Houston [1st Dist.] 1976, no writ); Joseph v. City of Ranger,
188 S.W.2d 1013, 1014 (Tex. Civ. App. — Eastland 1945, writ ref'd w.o.m.). John
Chezik Buick Co. v. Friendly Chevrolet Co., 749 S.W.2d 591, 594 (Tex. App. —
Dallas 1988, writ denied).
16.02 MFB’s Declaratory Judgment counterclaim is duplicative of Bailey’s Quiet
Title claim and therefore a dispute already before the Court and should be denied.
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 30 OF 34
16.03 Further, MFB has not proven that its foreclosure was valid as discussed
supra. The SPP Deed and Bailey Deed negated MFB’s right to foreclose or at least
its right to foreclose without notifying Bailey.
C. This Suit Does Not Support a Writ of Possession Counterclaim
16.04 The trial court, ignoring the plain language of TEX. R. CIV. P. 310, granted
MFB a writ of possession. The rule’s plain language specifies an order foreclosing
in a suit having for its object foreclosure:
When an order foreclosing a lien upon real estate is made
in a suit having for its object the foreclosure of such lien,
such order shall have all the force and effect of a writ of
possession as between the parties to the foreclosure suit
and any person claiming under the defendant to such suit
by any right acquired pending such suit; and the court shall
so direct in the judgment providing for the issuance of
such order. The sheriff or other officer executing such
order of sale shall proceed by virtue of such order of sale
to place the purchaser of the property sold thereunder in
possession thereof within thirty days after the day of sale.
16.05 This suit concerned a lien already foreclosed (precluding an order
foreclosing a lien). The suit did not have as its object the foreclosure of the lien
(which had already been done). No one could execute an order of sale because the
property had been sold. Finally, the property could not have been sold under the trial
court’s order as it had already been sold.
16.06 Shepardizing Rule 310 reveals the majority of citing cases were decided pre-
1939. Of the more recent cases (2003 and 1982), one is not applicable. The 2003
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 31 OF 34
case, from the San Antonio Fourth Court of Appeals ignores the plain language of
the Rule and finds a writ proper even though the purpose of the suit was not
foreclosure (which had occurred previously or the party was not informed). 9
16.07 It appears only one case since 1939 has interpreted this Rule and has ignored
its plain language. No Texas court has cited the San Antonio decision for this
proposition. Since it is a single opinion not binding on this Court, Bailey requests
this Court apply the plain language of the Rule and find the issuance of a writ not
appropriate when the foreclosure has already taken place and was not part of the
instant suit.
IV. BAILEY’S MOTION FOR SUMMARY JUDGMENT MIDFIRST
BANK’S COUNTERCLAIMS
17.01 Section III above discusses MFB’s counterclaims.
17.02 MFB did not satisfy its burden under Tex. R. Civ. P. 166a(c).
17.03 MFB’s counterclaim for Declaratory Judgment is not permitted as the issue
is already before the court.
17.04 This suit does not support a writ of possession counterclaim.
9
“We again disagree. A writ of possession is nothing more than a ‘writ of execution employed to
enforce a judgment to recover the possession of land. It commands the sheriff to enter the land and
give possession of it to the person entitled under the judgment.’ BLACK'S LAW DICTIONARY
1444 (West 1979). The writ was appropriate in this case because the Acevedos failed to supersede
the trial court's judgment awarding Stiles' home to her.” Acevedo v. Stiles, 2003 Tex. App. LEXIS
3854 (Tex. App.— San Antonio 2003, pet. denied)
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 32 OF 34
PRAYER
Karl B. Bailey respectfully requests that the Court reverse the judgment of
the District Court in all things for further action consistent with its opinion.
Respectfully submitted,
By:_________________________________
/s/ Anthony G. Read
ANTHONY G. READ, SBN: 24056184
WILLIAM B. GAMMON, SBN: 07611280
GAMMON LAW OFFICE, PLLC.
1201 Spyglass Drive, Suite 100
Austin, Texas 78746
Phone: 512-444-4529
Fax: 512-545-4279
Firm@GammonLawOffice.com
COUNSEL FOR APPELLANT
CERTIFICATE OF COMPLIANCE
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), as amended
effective January 1, 2015, the undersigned certifies that this Brief complies with
the length limitations of Rule 9.4(i) and the typeface requirements of Rule 9.4(e).
1. Exclusive of the contents excluded by Rule 9.4(i)(1), this Brief
contains 5120 words as counted by the Word Count function
(including textboxes, footnotes, and endnotes) of Microsoft Office
Word 2013.
2. This Brief has been prepared in proportionally spaced typeface using:
Software name and Version: Microsoft Office Word 2013
Typeface Name; Times New Roman
Font Size: 14 point
/s/ Anthony G. Read
_____________________________
Anthony G. Read
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 33 OF 34
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of Appellant’s Brief, with
Appendix, was served by ProDoc e-service or facsimile on this the 12th day of
January, 2015, to:
Chris Pochyla, SBN: 24032842
Counsel for MidFirst Bank
Barrett Daffin Frappier Turner & Engel, LLP
15000 Surveyor Blvd., Ste. 100
Addison TX 75001
Tel: (972) 340-7935
Fax: (972) 341-0734
/s/ Anthony G. Read
_____________________________
Anthony G. Read
BAILEY V. MIDFIRST BANK
APPELLANT’S BRIEF
CAUSE NO.: NO. 03-14-00632-CV
PAGE 34 OF 34
No. 03-14-00632-CV
In The Court of Appeals
For the Third District Court of Appeals
Austin, Texas
KARL B. BAILEY
Appellant,
v.
MIDFIRST BANK
Appellees.
APPENDIX TO APPELLANT’S BRIEF
A. Order on Defendant Midfirst Bank’s First Amended Motion for
Summary Judgment
B. Order on Plaintiff’s Motion to Sever
C. Defendant MidFirst Bank’s First Amended Motion for Summary
Judgment
D. Plaintiff’s Response to Defendant’s Traditional and No-Evidence Motion
for Summary Judgment and Plaintiff’s Motion for Summary Judgment
E. 7 TEX. ADMIN CODE § 65.3 (21)
F. TEX. R. CIV. P. 310
G. TEX. PROP. CODE 51.002(b)
H. TEX. R. CIV. P. 166a
APPENDIX
TAB A
APPENDIX
TAB B
APPENDIX
TAB C
APPENDIX
TAB D
6/25/2014 5:46:30 PM
Amalia Rodriguez-Mendoza
District Clerk
Travis County
D-1-GN-11-000558
CAUSE NO. D-1-GN-11-000558
KARL B. BAILEY, JR. § IN THE DISTRICT COURT
§
Plaintiff §
v §
§ 250th JUDICIAL DISTRICT
§
MIDFIRST BANK; SMOKE SIGNAL §
PASS, LLC; ERIC J. LEE; KW §
MANAGEMENT, LLC, d/b/a Keller §
Williams §
§
Defendants § TRAVIS COUNTY, TEXAS
PLAINTIFF’S RESPONSE TO
DEFENDANT’S TRADITIONAL & NO-EVIDENCE MOTION FOR SUMMARY
JUDGMENT AND PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT
Plaintiff, Karl B. Bailey, Jr., asks the Court to deny defendant MidFirst Bank’s motions
for summary judgment and to grant Plaintiff’s motion for summary judgment
against defendant MidFirst Bank.
INTRODUCTION
1. Plaintiff, Karl B. Bailey (Bailey), sued defendant, MidFirst Bank (MidFirst), for
breach of contract, violations of the Texas DTPA, void foreclosure, equitable
estoppel/unjust enrichment and quiet title.
2. MidFirst answered asserting counter claims for declaratory judgment and a writ
of possession. MidFirst’s chief claim is that Bailey was not a party to the Deed of
Trust, MidFirst was not aware the property in question had been deeded to Bailey
and therefore Bailey has no standing to bring these claims and was not entitled to
notice prior to foreclosure and MidFirst was entitled to keep payments Bailey
made on the note.
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 1 OF 14
BACKGROUND
3. The property in question is described in Exhibit 1 and is more commonly known
as 1234 Acanthus Street, Pflugerville, Texas 78660 (“the property”).
4. The property was initially purchased by Travis and Amy Chestnut through a Note
and Deed of Trust on or about July 15, 2004. The lender was Alethes, LLC. On
or about April 17, 2009, MidFirst allegedly obtained, by assignment and
endorsement, the Note and Deed of Trust on the property.
5. On or about July 30, 2009, the Chestnut’s transferred the property to Smoke
Signal Pass, LLC (SPP) under a General Warranty Deed.
6. SPP then transferred the property to Bailey on or about July 31, 2009 under a
Special Warranty Deed with Vendor’s Lien. Bailey began making payments in
September, 2009 and continued to make all payments until he was informed
MidFirst had foreclosed on the property by receipt of a three day notice to vacate.
SUMMARY-JUDGMENT EVIDENCE
7. To support the facts in this response, plaintiff offers the following summary-
judgment evidence attached to this response and incorporates the evidence into
this response by reference.
Exhibit 1: Deed of Trust dated July 15, 2004 and recorded in the
Travis County Property Records as Document 2004136582.
(Chestnut Deed).
Exhibit 2: Assignment of Deed of Trust, dated April 22, 2009 and
recorded in the Travis County Property Records as Document
2009079539. (MidFirst Assignment)
Exhibit 3: General Warranty Deed, dated July 30, 2009 and
recorded in the Travis County Property Records as Document
200913692. (SPP Deed).
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 2 OF 14
Exhibit 4: Special Warranty Deed with Vendor’s Lien dated July
31, 2009 and recorded in the Travis County Property Records as
Document 2009135933. (Bailey Deed)
Exhibit 5: Appointment of Substitute Trustee dated November
5, 2010 and recorded in the Travis County Property Records as
Document 2010182473.
Exhibit 6: Affidavit of Karl Bailey
Exhibit 7: Checks and bank statement showing Bailey
payments to SPP.
Exhibit 8: Substitute Trustee’s Deed dated January 4, 2011
and recorded in the Travis County Property Records as Document
2011006182.
RESPONSE TO TRADITIONAL SUMMARY JUDGMENT ON
PLAINTIFF’S CAUSES OF ACTION DUE TO LACK OF STANDING
A. Defendant did not disprove plaintiff’s causes of action as a matter of law.
8. A defendant is entitled to summary judgment on a plaintiff’s cause of action if
the defendant can disprove at least one element of the cause of action as a matter
of law. Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002); see Tello
v. Bank One, N.A., 218 S.W.3d 109, 113 (Tex. App.—Houston [14th Dist.] 2007,
no pet.).
9. The Court should deny defendant’s motion for summary judgment on plaintiff’s
cause of action because defendant did not disprove Bailey’s claims as a matter of
law.
10. The Court should deny defendant’s motion for summary judgment on plaintiff’s
cause of action because the Affidavits and property records attached to
defendant’s motion are defective and do not present competent summary-
judgment evidence. Specifically, see Bailey’s Motion to Strike MidFirst Bank’s
Summary Judgment Evidence.
A. MidFirst did not prove Bailey lacks standing as a matter of law
11. MidFirst’s chief argument is that Bailey does not have standing to sue on breach
of the Deed of Trust because he is not a party to the Deed of Trust. Further,
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 3 OF 14
MidFirst asserts Bailey is not entitled to the notices required by law and by the
Deed of Trust because he was not a party to the contract and not obligated to pay
the debt.
12. The Court should deny MidFirst’s motion for summary judgment on the issue of
Bailey’s standing because MidFirst did not prove lack of standing as a matter of
law. Bailey does have standing as a matter of law based on the Chain of Title
proven by Exhibits 1 through 4.
13. Bailey’s standing is further evidenced by the Chestnut deed, Section 12, which
states: “[t]he covenants and agreements of this Security Instrument shall bind and
benefit the successors and assigns of Lender and Borrower, subject to the
provisions of Paragraph 9(b).” 1
14. Since Bailey was an assignee and/or successor of Borrower (the Chestnuts), the
covenants and agreements of the Security Instrument benefit him. MidFirst was
required to provide the contractual notices in the Deed of Trust to Bailey. This
clause also makes Bailey a party to the contract. A party to a contract can always
sue under the contract.
15. Both the SPP Deed and the Bailey Deed were properly recorded in the Travis
County Property Records. This gives rise to an irrebutable presumption MidFirst
had notice of these instruments. 2
1
Paragraph 9(b) is the “due on sale” clause that gives the Lender the right to accelerate
the debt if the original borrower sells their interest without the Lender’s permission.
2
Noble Mortg. & Invs. LLC v. D&M Vision Invs., LLC, 340 S.W.3d 65 (Tex. App.
Houston [1st Dist.] 2011, no pet.) “The Texas Property Code provides that an "instrument
that is properly recorded in the proper county is . . . notice to all persons of the existence
of the instrument." Tex. Prop. Code Ann. § 13.002. Recorded instruments in a grantee's
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 4 OF 14
16. Some courts have said instruments recorded after the property was purchased do
not automatically provide notice to the purchaser. See Andretta v. West, 415
S.W.2d 638, 642 (Tex. 1967). However, in the instant case, MidFirst had reason
to investigate when payment origination changed from the Chestnuts to SPP.
This should have led them to inquire regarding what had been filed to lead SPP to
make payments. 3 Additionally, MidFirst recorded documents in the Travis
County Property Records after the SPP Deed and the Bailey Deed were recorded.
For example, Exhibit 5 was recorded in November 2010 showing MidFirst or one
of its agents was actively accessing the property records. At that point, MidFirst
would have had notice of the SPP Deed and the Bailey Deed.
17. MidFirst has produced no admissible evidence to prove they were not aware of
these deeds. At best, an incompetent interested witness affidavit claims only that
MidFirst was not aware of the Deeds on or about the time they were executed.
The Thad Burr affidavit (Exhibit A to MidFirst’s motion) did not address the
question of when MidFirst learned of the deeds.
18. MidFirst and their agents were either not diligent in execution of the foreclosure
or ignored the SPP Deed and the Bailey Deed. Before foreclosing on a
homeowner, it should be expected the appropriate property records would be
chain of title generally establish an irrebuttable presumption of notice. Ford v. Exxon
Mobil Chem. Co., 235 S.W.3d 615, 617 (Tex. 2007).”
3
“Reasonable diligence requires that owners of property interests make themselves aware
of relevant information available in the public record.” …’However, reliance is not
reasonable when information revealing the truth could have been discovered within the
limitations period.’ Diligence is required when claimants have been ‘put on notice of the
alleged harm of injury-causing actions.’”
Shell Oil Co. v. Ross, 356 S.W.3d 924, 928 (Tex. 2011)
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 5 OF 14
checked to determine if there were any tax or judgment liens or second liens.
These could affect the foreclosure and certainly would affect the allocation of
sales proceeds.
19. Additionally, several of the documents filed with MidFirst’s Motion have check
marks not on the recorded copies. These check marks seem to be noting
particular data in the document. For example, MidFirst’s Exhibit A-1, Bailey’s
Exhibit 1 (Chester Deed) has checks on the names of the borrowers and the
amount borrowed. MidFirst’s Exhibit A-4, Bailey’s Exhibit 4 (Bailey Deed) has
these same check marks. It is a key fact issue as to when the marks were made
and by whom. If made by MidFirst or its agent prior to the sale, it is evidence of
knowledge of the Bailey Deed and, by extension, the SPP Deed.
20. Finally, several of the exhibits in MidFirst’s Motion were clearly downloaded
from the Travis County Clerk’s website (they have “Unofficial Document”
emblazoned across the pages). This shows MidFirst or its agent was accessing the
property records for the property and should have noticed the Bailey and SPP
deeds.
21. At a minimum, a fact issue exists regarding what MidFirst knew and when they
knew it.
B. MidFirst did not prove Bailey lacks standing to challenge any assignment.
22. As discussed supra, Bailey has standing with regard to the Chester Deed and, as
a successor and/or assign is entitled to the benefits thereof.
23. Texas law follows the common law rule where a debtor may bring any ground
against an assignee to challenge an assignment as void or invalid. See Tri-Cities
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 6 OF 14
Const., Inc. v. American Nat. Ins. Co., 523 S.W.2d 426, 430 (Tex. Civ. App.—
Houston [1st Dist.] 1975, no writ); Glass v. Carpenter, 330 S.W.2d 530, 537
(Tex. Civ. App.—San Antonio 1959, writ ref’d n.r.e.). This was recently
acknowledged by the Federal 5th Circuit, and is the majority rule followed in
Texas. See Reinagel, et al. v. Deutsche Bank Nat’l Trust Co., No. 12-50569, 2013
U.S. App. LEXIS 14089 (5th Cir. (Tex.) July 11, 2013) (reversing district court,
Hon. Sam Sparks, on this point of law);
24. Texas Courts also permit challenging the chain of assignments regarding the right
of a party to foreclose. See Priesmeyer v. Pacific Southwest Bank, F.S.B., 917
S.W.2d 937 (Tex.App.—Austin 1996); see also Martin v. New Century Mortgage
Co., 2012 Tex. App. LEXIS 4705 (Tex. App.—Houston [1st Dist.] 2012); Austin
v. Countrywide Home Loans, 261 S.W.3d 68 (Tex. App.—Houston [1st Dist.]
2008); Leavings v. Mills, 175 S.W.3d 301 (Tex. App.— Houston [1st Dist.] 2004,
no pet.); Shepard v. Boone, 99 S.W.3d 263 (Tex. App.—Eastland 2003).
C. Plaintiff has a viable cause of action for breach of contract.
25. MidFirst claimed that it is entitled to summary judgment on Bailey’s breach of
contract claim because Bailey did not have a contract with MidFirst. As
discussed supra, Bailey is a successor and/or assignee of the Chestnut Deed and is
bound and benefited by the Deed of Trust. Therefore, he is a party to the contract.
If MidFirst is a party to the contract, Bailey has a contract with MidFirst.
26. The Chestnut deed is a valid contract, Bailey tendered every payment required
of him until after foreclosure. See Exhibits 6 and 7 Affidavit and Proof of
payments. MidFirst breached the contract by not providing notice to Bailey as
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 7 OF 14
admitted in paragraph 23 of MidFirst’s Motion. Bailey pled damages of having a
void foreclosure executed on his home. This was a violation of Section 18 of the
Chester Deed.
D. Bailey’s pleading supports his assertion the foreclosure is void ab initio
and should be set aside
27. The intervening actions of the Chestnuts and SPP to deed the property to Bailey
negated MidFirst’s authority to conduct a foreclosure. An action taken without
authority is void. Bailey is entitled to have the foreclosure sale set aside because
MidFirst did not own any of the debt.
E. Bailey’s Quiet Title Claim is Supported by Proper Assignments
28. MidFirst states Plaintiff’s Quiet Title action fails but then discusses the elements
of a trespass to title action. Bailey has pled Quiet Title but not trespass to quiet
title.
29. The elements of a suit to Quiet Title are:
(a) Petitioner's legal or equitable interest in specific property
(b) Existence of claim by defendant that appears valid on its face and
interferes with or hinders petitioner's title.
(c) Invalidity or unenforceability of defendant's claim
30. Petitioner seeks judicial decree quieting title to property by removing cloud cast
by defendant's claim or contention.
31. The Bailey Title shows his interest in the specific property. The Substitute
Trustee’s Deed (Exhibit 8) appears valid on its face and interferes with Bailey’s
title.
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 8 OF 14
32. MidFirst’s claim is invalid because of the void foreclosure discussed supra.
33. Bailey has sought judicial decree quieting title to the property by removing the
cloud cast by MidFirst’s claim or contention.
RESPONSE TO NO-EVIDENCE SUMMARY JUDGMENT
A. Bailey has sufficient evidence to raise fact issues on his breach of contract
claim.
34. In a no-evidence motion for summary judgment, a defendant can challenge a
plaintiff to produce evidence to support one or more elements of the plaintiff’s
cause of action on which the plaintiff would have the burden of proof at trial after
an adequate time for discovery has passed. TEX. R. CIV. P. 166a(i). To avoid a no-
evidence summary judgment, the plaintiff is not required to marshal its proof; the
plaintiff only needs to point out evidence that raises a fact issue on the elements
challenged in the defendant’s motion. Hamilton v. Wilson, 249 S.W.3d 425, 426
(Tex. 2008). To raise a genuine issue of material fact, the plaintiff must produce
more than a scintilla of evidence in support of the challenged elements. Smith v.
O’Donnell, 288 S.W.3d 417, 424 (Tex. 2009); Ford Motor Co. v. Ridgway, 135
S.W.3d 598, 600 (Tex. 2004). More than a scintilla of evidence is produced if the
evidence is sufficient to allow reasonable and fair-minded people to differ in their
conclusions on whether the challenged fact exists. Forbes, Inc. v. Granada
Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). In evaluating whether more
than a scintilla of evidence exists, the court must view the evidence in the light
most favorable to the plaintiff, crediting evidence favorable to the plaintiff if
reasonable jurors could, and disregarding contrary evidence unless reasonable
jurors could not. Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009).
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 9 OF 14
35. Defendant alleged that there is no evidence supporting essential elements of
plaintiff’s cause of action for breach of contract. MidFirst only challenges the
element requiring the existence of a contract. Bailey has shown there is more
than a scintilla of evidence he is a successor and/or assignee of the Chester Deed
which is the contract that MidFirst contends gives them contractual rights in the
lien and the ability to foreclose. MidFirst is purportedly a successor and/or
assignee of the Deed of Trust
36. The Court should deny defendant’s no-evidence motion for summary judgment
because plaintiff has produced sufficient evidence to raise a fact issue on the
element challenged by MidFirst.
37. MidFirst also seeks no-evidence summary judgment on a wrongful foreclosure
claim that was not pled. Instead, Bailey stated the foreclosure was void.
B. Bailey has sufficient evidence to support his Quiet Title Claim
38. Bailey’s Quiet Tile claim evidence is discussed supra. Bailey has provided more
than a scintilla of evidence to support the elements of Quiet Title.
REQUEST FOR TRADITIONAL SUMMARY JUDGMENT ON
DEFENDANT’S COUNTERCLAIMS
A. MidFirst did not satisfy its burden under Texas Rule of Civil Procedure 166a(c)
39. To succeed on a traditional motion for summary judgment on its counterclaim,
the defendant must show that there is no genuine issue of material fact and that it
is entitled to summary judgment as a matter of law. Tex. R. Civ. P. 166a(c); Mann
Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 10 OF 14
2009); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). To meet
this burden, the defendant must conclusively prove all essential elements of its
claim. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986). A matter is
conclusively established if reasonable people could not differ on the conclusion to
be drawn from the evidence. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex.
2005). If the defendant establishes its right to summary judgment as a matter of
law, the burden shifts to the plaintiff to present evidence that raises a genuine
issue of material fact. Boudreau v. Fed. Trust Bank, 115 S.W.3d 740, 743 (Tex.
App.—Dallas 2003, pet. denied). In deciding whether to grant defendant’s
motion, the court must take as true all competent evidence favorable to the
plaintiff and indulge every reasonable inference and resolve any doubts in the
plaintiff’s favor. Limestone Prods. Distrib., Inc. v. McNamara, 71 S.W.3d 308,
311 (Tex. 2002); Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999);
Nixon, 690 S.W.2d at 548-49.
40. MidFirst moved for summary judgment on its counterclaim for Declaratory
Judgment, arguing that its motion had proven it had standing to foreclose.
Because Plaintiff has not brought an action under the Act, Movant is not
permitted to bring counterclaims under the Act. The Declaratory Judgment Act is
not available to settle disputes already pending before a court. Johnson v. Hewitt,
539 S.W.2d 239, 240-241 (Tex. Civ. App. -- Houston [1st Dist.] 1976, no writ);
Joseph v. City of Ranger, 188 S.W.2d 1013, 1014 (Tex. Civ. App. -- Eastland
1945, writ ref'd w.o.m.). John Chezik Buick Co. v. Friendly Chevrolet Co., 749
S.W.2d 591, 594 (Tex. App. Dallas 1988).
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 11 OF 14
41. MidFirst’s Declaratory Judgment counterclaim is duplicative of Bailey’s Quiet
Title claim and therefore a dispute already before the Court and should be denied.
42. Further, MidFirst has not proven that its foreclosure was valid as discussed
supra. The SPP Deed and Bailey Deed negated MidFirst’s right to foreclose or at
least its right to foreclose without notifying Bailey.
B. This suit does not support a writ of possession counterclaim.
43. Tex. R. Civ. Pro. 310 provides a writ of possession “when an order foreclosing a
lien upon real estate is made in a suit having for its object the foreclosure of such
lien…” This suit does not have for its object the foreclosure of the lien. Instead,
it is a suit claiming the foreclosure of the lien was improper due, among other
things, to a lack of standing and proper foreclosure procedure.
44. Additionally, MidFirst, as discussed supra, has not established its right to
foreclose.
CONCLUSION
45. Plaintiff Karl B. Bailey has provided admissible evidence to support his claims
and defeat defendant MidFirst Bank’s amended traditional and no evidence
motions for summary judgment. Further, admissible evidence has been provided
to disprove defendant MidFirst Bank’s, counterclaims.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Karl B. Bailey requests that the
Amended Motion for Summary Judgment of MidFirst Bank, Defendant, be denied
in its entirety and further that summary judgment be entered in his favor on the
counterclaims of MidFirst Bank. If the Court grants defendant’s motion for
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 12 OF 14
summary judgment, plaintiff asks the Court to overrule plaintiff’s objections so they
will be preserved for appeal.
Respectfully submitted,
/s/ Anthony G. Read
---------------------------------
William B. Gammon SBN: 07611280
Anthony G. Read SBN: 24056184
1201 Spyglass Dr., Suite 100
Austin, Texas 78746
(512) 472-8909
(888) 545-4279 (fax)
firm@gammonlawoffice.com
Attorneys for Karl B. Bailey
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 13 OF 14
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing instrument has been
served via ProDoc E-Service or fax on June 25, 2014, in accordance with Rule 21a,
Texas Rules of Civil Procedure, on all counsel of record.
CHRIS H. POCHYLA
BARRETT DAFFIN FRAPPIER TURNER & ENGEL, LLP
15000 Surveyor Boulevard, Suite 100
Addison, TX 75001
Phone: 972-340-7955
Fax: 972-341-0734
/s/ Anthony G. Read
Anthony G. Read
KARL B. BAILEY, JR. V. MIDFIRST BANK ET AL
ANSWER AMENDED MOTION FOR SUMMARY JUDGMENT PAGE 14 OF 14
APPENDIX
TAB E
TEX. R. CIV. P. 310 Writ of Possession
When an order foreclosing a lien upon real estate is made in a suit having for its
object the foreclosure of such lien, such order shall have all the force and effect of
a writ of possession as between the parties to the foreclosure suit and any person
claiming under the defendant to such suit by any right acquired pending such suit;
and the court shall so direct in the judgment providing for the issuance of such
order. The sheriff or other officer executing such order of sale shall proceed by
virtue of such order of sale to place the purchaser of the property sold thereunder in
possession thereof within thirty days after the day of sale.
APPENDIX
TAB F
7 Tex. Admin. Code § 65.3. Definitions
The following words and terms, when used in this chapter, shall have the
following meanings, unless the context clearly indicates otherwise.
…
(21) Wrap-around real estate loan--A financing device whereby a junior mortgage
lien secures a liability consisting of the amount of senior debt, plus any additional
funds advanced to the borrower.
APPENDIX
TAB G
TEX. PROP. CODE § 51.002. Sale of Real Property Under Contract Lien
(a) A sale of real property under a power of sale conferred by a deed of trust or
other contract lien must be a public sale at auction held between 10 a.m. and 4 p.m.
of the first Tuesday of a month. Except as provided by Subsection (h), the sale
must take place at the county courthouse in the county in which the land is located,
or if the property is located in more than one county, the sale may be made at the
courthouse in any county in which the property is located. The commissioners
court shall designate the area at the courthouse where the sales are to take place
and shall record the designation in the real property records of the county. The sale
must occur in the designated area. If no area is designated by the commissioners
court, the notice of sale must designate the area where the sale covered by that
notice is to take place, and the sale must occur in that area.
(b) Except as provided by Subsection (b-1), notice of the sale, which must include
a statement of the earliest time at which the sale will begin, must be given at least
21 days before the date of the sale by:
(1) posting at the courthouse door of each county in which the property is located
a written notice designating the county in which the property will be sold;
(2) filing in the office of the county clerk of each county in which the property is
located a copy of the notice posted under Subdivision (1); and
(3) serving written notice of the sale by certified mail on each debtor who,
according to the records of the mortgage servicer of the debt, is obligated to pay
the debt.
(b-1) If the courthouse or county clerk's office is closed because of inclement
weather, natural disaster, or other act of God, a notice required to be posted at the
courthouse under Subsection (b)(1) or filed with the county clerk under Subsection
(b)(2) may be posted or filed, as appropriate, up to 48 hours after the courthouse or
county clerk's office reopens for business, as applicable.
(c) The sale must begin at the time stated in the notice of sale or not later than three
hours after that time.
(d) Notwithstanding any agreement to the contrary, the mortgage servicer of the
debt shall serve a debtor in default under a deed of trust or other contract lien on
real property used as the debtor's residence with written notice by certified mail
stating that the debtor is in default under the deed of trust or other contract lien and
giving the debtor at least 20 days to cure the default before notice of sale can be
given under Subsection (b). The entire calendar day on which the notice required
by this subsection is given, regardless of the time of day at which the notice is
given, is included in computing the 20-day notice period required by this
subsection, and the entire calendar day on which notice of sale is given under
Subsection (b) is excluded in computing the 20-day notice period.
(e) Service of a notice under this section by certified mail is complete when the
notice is deposited in the United States mail, postage prepaid and addressed to the
debtor at the debtor's last known address. The affidavit of a person knowledgeable
of the facts to the effect that service was completed is prima facie evidence of
service.
(f) Each county clerk shall keep all notices filed under Subdivision (2) of
Subsection (b) in a convenient file that is available to the public for examination
during normal business hours. The clerk may dispose of the notices after the date
of sale specified in the notice has passed. The clerk shall receive a fee of $ 2 for
each notice filed.
(f-1) If a county maintains an Internet website, the county must post a notice of
sale filed with the county clerk under Subsection (b)(2) on the website on a page
that is publicly available for viewing without charge or registration.
(g) The entire calendar day on which the notice of sale is given, regardless of the
time of day at which the notice is given, is included in computing the 21-day notice
period required by Subsection (b), and the entire calendar day of the foreclosure
sale is excluded.
(h) For the purposes of Subsection (a), the commissioners court of a county may
designate an area other than an area at the county courthouse where public sales of
real property under this section will take place that is in a public place within a
reasonable proximity of the county courthouse as determined by the
commissioners court and in a location as accessible to the public as the courthouse
door. The commissioners court shall record that designation in the real property
records of the county. A designation by a commissioners court under this section is
not a ground for challenging or invalidating any sale. A sale must be held at an
area designated under this subsection if the sale is held on or after the 90th day
after the date the designation is recorded. The posting of the notice required by
Subsection (b)(1) of a sale designated under this subsection to take place at an area
other than an area of the courthouse remains at the courthouse door of the
appropriate county.
(i) Notice served on a debtor under this section must state the name and address of
the sender of the notice and contain, in addition to any other statements required
under this section, a statement that is conspicuous, printed in boldface or
underlined type, and substantially similar to the following: "Assert and protect
your rights as a member of the armed forces of the United States. If you are or your
spouse is serving on active military duty, including active military duty as a
member of the Texas National Guard or the National Guard of another state or as a
member of a reserve component of the armed forces of the United States, please
send written notice of the active duty military service to the sender of this notice
immediately."
APPENDIX
TAB H
TEX. R. CIV. P. 166a Summary Judgment
(a) For Claimant. --A party seeking to recover upon a claim, counterclaim, or
cross-claim or to obtain a declaratory judgment may, at any time after the adverse
party has appeared or answered, move with or without supporting affidavits for a
summary judgment in his favor upon all or any part thereof. A summary judgment,
interlocutory in character, may be rendered on the issue of liability alone although
there is a genuine issue as to amount of damages.
(b) For Defending Party. --A party against whom a claim, counterclaim, or cross-
claim is asserted or a declaratory judgment is sought may, at any time, move with
or without supporting affidavits for a summary judgment in his favor as to all or
any part thereof.
(c) Motion and Proceedings Thereon. --The motion for summary judgment shall
state the specific grounds therefor. Except on leave of court, with notice to
opposing counsel, the motion and any supporting affidavits shall be filed and
served at least twenty-one days before the time specified for hearing. Except on
leave of court, the adverse party, not later than seven days prior to the day of
hearing may file and serve opposing affidavits or other written response. No oral
testimony shall be received at the hearing. The judgment sought shall be rendered
forthwith if (i) the deposition transcripts, interrogatory answers, and other
discovery responses referenced or set forth in the motion or response, and (ii) the
pleadings, admissions, affidavits, stipulations of the parties, and authenticated or
certified public records, if any, on file at the time of the hearing, or filed thereafter
and before judgment with permission of the court, show that, except as to the
amount of damages, there is no genuine issue as to any material fact and the
moving party is entitled to judgment as a matter of law on the issues expressly set
out in the motion or in an answer or any other response. Issues not expressly
presented to the trial court by written motion, answer or other response shall not be
considered on appeal as grounds for reversal. A summary judgment may be based
on uncontroverted testimonial evidence of an interested witness, or of an expert
witness as to subject matter concerning which the trier of fact must be guided
solely by the opinion testimony of experts, if the evidence is clear, positive and
direct, otherwise credible and free from contradictions and inconsistencies, and
could have been readily controverted.
(d) Appendices, References and Other Use of Discovery Not Otherwise on File. --
Discovery products not on file with the clerk may be used as summary judgment
evidence if copies of the material, appendices containing the evidence, or a notice
containing specific references to the discovery or specific references to other
instruments, are filed and served on all parties together with a statement of intent to
use the specified discovery as summary judgment proofs: (i) at least twenty-one
days before the hearing if such proofs are to be used to support the summary
judgment; or (ii) at least seven days before the hearing if such proofs are to be used
to oppose the summary judgment.
(e) Case Not Fully Adjudicated on Motion. --If summary judgment is not rendered
upon the whole case or for all the relief asked and a trial is necessary, the judge
may at the hearing examine the pleadings and the evidence on file, interrogate
counsel, ascertain what material fact issues exist and make an order specifying the
facts that are established as a matter of law, and directing such further proceedings
in the action as are just.
(f) Form of Affidavits; Further Testimony. --Supporting and opposing affidavits
shall be made on personal knowledge, shall set forth such facts as would be
admissible in evidence, and shall show affirmatively that the affiant is competent
to testify to the matters stated therein. Sworn or certified copies of all papers or
parts thereof referred to in an affidavit shall be attached thereto or served
therewith. The court may permit affidavits to be supplemented or opposed by
depositions or by further affidavits. Defects in the form of affidavits or attachments
will not be grounds for reversal unless specifically pointed out by objection by an
opposing party with opportunity, but refusal, to amend.
(g) When Affidavits Are Unavailable. --Should it appear from the affidavits of a
party opposing the motion that he cannot for reasons stated present by affidavit
facts essential to justify his opposition, the court may refuse the application for
judgment or may order a continuance to permit affidavits to be obtained or
depositions to be taken or discovery to be had or may make such other order as is
just.
(h) Affidavits Made in Bad Faith. --Should it appear to the satisfaction of the court
at any time that any of the affidavits presented pursuant to this rule are presented in
bad faith or solely for the purpose of delay, the court shall forthwith order the party
employing them to pay to the other party the amount of the reasonable expenses
which the filing of the affidavits caused him to incur, including reasonable
attorney's fees, and any offending party or attorney may be adjudged guilty of
contempt.
(i) No-Evidence Motion. --After adequate time for discovery, a party without
presenting summary judgment evidence may move for summary judgment on the
ground that there is no evidence of one or more essential elements of a claim or
defense on which an adverse party would have the burden of proof at trial. The
motion must state the elements as to which there is no evidence. The court must
grant the motion unless the respondent produces summary judgment evidence
raising a genuine issue of material fact.