Mary Rust v. Bank of America, N.A. ( 2016 )

Opinion issued June 9, 2016
In The
Court of Appeals
For The
First District of Texas
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NO. 01-15-00373-CV
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MARY RUST, Appellant
V.
BANK OF AMERICA, N.A., Appellee
On Appeal from the County Court at Law No. 1
Travis County, Texas
Trial Court Case No. C-1-CV-14-010108

The Supreme Court of Texas transferred this appeal from the Court of Appeals
for the Third District of Texas. See Misc. Docket No. 15-9054 (Tex. Mar. 24,
2015); see also TEX. GOV’T CODE § 73.001. We are unaware of any conflict
between precedent of the Court of Appeals for the Third District and that of
this court on any relevant issue. See TEX. R. APP. P. 41.3.
MEMORANDUM OPINION
After purchasing a home at a foreclosure sale, Bank of America, N.A. filed a
forcible-detainer action to obtain possession of the property from its former owner,
Mary Rust. The trial court rendered a judgment for the bank, awarding it possession
of the house and attorney’s fees. Rust contends that the judgment must be reversed
for three reasons. First, she argues that the trial court erred by excluding evidence
relating to the foreclosure on and title to the property. Second, she argues that the
bank introduced no evidence of its right to possession other than an affidavit
concerning the foreclosure process that the trial court should have excluded as
legally deficient. Finally, even if the judgment in favor of the bank is otherwise
affirmed, Rust contends that the trial court’s award of attorney’s fees must be
reversed.
We affirm.
Background
Mary Rust defaulted on her home mortgage, and the house was purchased by
Bank of America, N.A. at a foreclosure sale. When Rust refused to vacate the
property, the bank filed a forcible-detainer action in the Travis County justice court.
Because Rust had filed a separate lawsuit disputing title to the same property in
Travis County district court, the justice court abated the forcible-detainer action until
the title issues were resolved by the district court.
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Bank of America removed Rust’s separate lawsuit to federal court. That court
rendered a summary judgment rejecting Rust’s claims regarding ostensible defects
in the foreclosure process. The United States Court of Appeals for the Fifth Circuit
affirmed the judgment. Rust v. Bank of Am., N.A., 573 F. App’x 343 (5th Cir. 2014)
(per curiam).
After Rust’s separate lawsuit was resolved, this forcible-detainer action
resumed. The justice court entered a judgment in favor of Bank of America,
awarding it possession of the premises, and Rust appealed to the Travis County court
at law, which tried the suit de novo.
At trial, the county court at law excluded a variety of evidence about title and
the foreclosure process that Rust tried to introduce. Rust made offers of proof
regarding the excluded evidence. The trial court also admitted an affidavit made by
Carolyn Holleman, an employee of the substitute trustee under the deed of trust
relating to the property, over Rust’s objection that the affidavit did not show that it
was based on personal knowledge. In her affidavit, Holleman attested to the
regularity of the foreclosure.
The county court at law entered a judgment in which it ordered that Bank of
America was entitled to possession of the home. Its judgment also awarded the bank
$1,000 in attorney’s fees and conditionally awarded additional fees in the event of
an appeal.
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Rust filed a notice of appeal to the Third Court of Appeals. Her appeal
subsequently was transferred to this court.
Analysis
I. Evidentiary issues
Rust challenges several evidentiary rulings made at trial. We review a trial
court’s decision to admit or exclude evidence for abuse of discretion. Scottsdale Ins.
Co. v. Nat’l Emergency Servs., Inc., 175 S.W.3d 284, 297 (Tex. App.—Houston [1st
Dist.] 2004, pet. denied); Codner v. Arellano, 40 S.W.3d 666, 674 (Tex. App.—
Austin 2001, no pet.). A trial court abuses its discretion if it acts without reference
to any guiding rules or principles. Scottsdale Ins., 175 S.W.3d at 297; Codner, 40
S.W.3d at 674. It also does so if it fails to analyze or apply the law correctly,
including constitutional law. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992).
To obtain reversal of a judgment based on the admission or exclusion of
evidence, a party must show that the trial court not only erred but also that its error
probably caused the rendition of an improper judgment. Codner, 40 S.W.3d at 674;
Owens-Corning Fiberglas Corp. v. Malone, 916 S.W.2d 551, 557 (Tex. App.—
Houston [1st Dist.] 1996), aff’d, 972 S.W.2d 35 (Tex. 1998). This generally requires
the complaining party to show that the judgment turns on the particular evidence in
question. H2O Sols., Ltd. v. PM Realty Grp., 438 S.W.3d 606, 621 (Tex. App.—
Houston [1st Dist.] 2014, pet. denied); Codner, 40 S.W.3d at 674–75.
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A. Proof of title and foreclosure
Rust contends that the trial court erred by excluding evidence of defects in the
title to the subject property and in the foreclosure process. She concedes that there
is precedent supporting the exclusion of this evidence in forcible-detainer actions,
but she argues that better-reasoned decisions permit this proof for the limited
purpose of contesting ownership. She further argues that the exclusion of this
evidence violated her constitutional right to due process and due course of law. The
bank responds that proof of supposed defects relating to its title and the foreclosure
by which it obtained title is inadmissible in forcible-detainer actions, and it further
notes that the Fifth Circuit already rejected Rust’s foreclosure- and title-related
claims on the merits.
Forcible-detainer suits like this one solely concern the right to immediate
possession of the subject property. Carlson’s Hill Country Beverage v.
Westinghouse Rd. Joint Venture, 957 S.W.2d 2d 951, 953 (Tex. App.—Austin 1997,
no pet.); see also Morris v. Am. Home Mortg. Servicing, Inc., 360 S.W.3d 32, 35
(Tex. App.—Houston [1st Dist.] 2011, no pet.). A procedural rule governing
forcible-detainer suits ensures that the right of possession remains the focus by
providing that the trial court “must adjudicate the right to actual possession and not
title.” TEX. R. CIV. P. 510.3(e). Based on this rule, the Third Court of Appeals has
held that “defects in the foreclosure process or with appellee’s title to the property
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may not be considered in a forcible detainer suit.” Bierwirth v. Fed. Nat’l Mortg.
Ass’n, No. 03-13-00076-CV, 2014 WL 902541, at *1 (Tex. App.—Austin Mar. 6,
2014, no pet.) (mem. op.); see also Morris, 360 S.W.3d at 36. Rust claims that this
interpretation of the rule is either mistaken or unconstitutional, because it prevented
her from introducing proof disputing the bank’s right of possession.
Neither Rule 510.3(e) nor Bierwirth’s interpretation of the rule prevented Rust
from litigating defects in the foreclosure process or title. The rule merely required
her to raise these issues in a separate suit in a court with the jurisdiction to hear them.
TEX. R. CIV. P. 510.3(e); Jaimes v. Fed. Nat’l Mortg. Ass’n, No. 03-13-00290-CV,
2013 WL 7809741, at *2–3 (Tex. App.—Austin 2013, no pet.) (mem. op.)
(reaffirming that “forcible detainer actions in justice court may be prosecuted
concurrently with title disputes in district court”); Morris, 360 S.W.3d at 35 (same).
Rust did so, filing a separate lawsuit in which she asserted that there were defects in
the foreclosure process and Bank of America’s title to the property. The bank’s
forcible-detainer suit was abated pending the outcome of that separate lawsuit, which
was not successful. Rust, 573 F. App’x at 345–48. So the forcible-detainer judgment
that Rust now appeals was rendered only after her foreclosure- and title-related
claims already had been resolved against her.
Rust was not prevented from asserting defects in the foreclosure process or
the title to the property. She did so in a separate lawsuit and lost. Rule 510.3(e)
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circumscribes the scope of a forcible-detainer action to exclude adjudication of title
issues, which justifies exclusion of foreclosure- and title-related proof to the extent
its relevance is limited to disputing title. Rust’s brief confirms that her objective in
introducing the excluded evidence was to show that “Bank of America was not
vested with title.” That issue was not the subject of the forcible-detainer action, and
the trial court had discretion to exclude it on that basis. Rust offers no authority for
the proposition that her due-process rights were violated because the trial court did
not permit her to relitigate that issue, which already had been decided against her in
another lawsuit. Nor could she. Due process requires that Rust have her day in court,
not that she have it twice over. See Morris, 360 S.W.3d at 35–36 (rejecting argument
made by defendant in forcible-detainer action that his due process rights were
violated by trial court’s refusal to consider evidence about foreclosure, because “the
propriety of a foreclosure cannot be considered in a forcible detainer action”); see
also Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 721 (Tex. 1990) (due
process requires that litigants have their day in court as prerequisite to operation of
collateral estoppel or issue preclusion). Accordingly, we hold that the trial court did
not abuse its discretion by excluding title- and foreclosure-related evidence.
B. Carolyn Holleman’s affidavit
Rust contends that the court erred by admitting into evidence Holleman’s
affidavit, which attested to the regularity of the foreclosure sale. She argues that the
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affidavit should have been excluded because it was not direct and unequivocal, it did
not state that its contents were true and correct, and its representations were not based
on personal knowledge. Without this affidavit, Rust contends, Bank of America
lacks proof of ownership and therefore could not show that it has the right of
possession. The bank responds that any error in the admission of the Holleman
affidavit is harmless and that there is legally sufficient evidence in the record of its
right to immediate possession of the property.
An affidavit must be made on personal knowledge. Humphreys v. Caldwell,
888 S.W.2d 469, 470–71 (Tex. 1994). But it need not explicitly state that it is made
on “personal knowledge,” if it is otherwise clear that the affiant is testifying based
on personal knowledge. Churchill v. Mayo, 224 S.W.3d 340, 346 (Tex. App.—
Houston [1st Dist.] 2006, pet. denied). Similarly, when an affidavit reflects personal
knowledge and is notarized, the omission of a representation that it is “true and
correct” does not render it defective. Id. at 346–47; De La Garza v. Tex. Dep’t of
Ins., No. 03-11-00869-CV, 2015 WL 1285702, at *4 (Tex. App.—Austin Mar. 19,
2015, no pet.) (mem. op.). An affiant’s representation that the facts stated within the
affidavit are true “to the best of my knowledge and belief” is not direct and
unequivocal and, therefore, is insufficient to establish personal knowledge. State ex
rel. Driscoll v. Lindsay, 877 S.W.2d 856, 857 (Tex. App.—Houston [1st Dist.] 1994,
writ denied); $485.00 in U.S. Currency v. State, No. 03-12-00325-CV, 2014 WL
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4364911, at *2 (Tex. App.—Austin Aug. 28, 2014, no pet.) (mem. op.). An affiant’s
position or job responsibilities may suffice to show personal knowledge in certain
circumstances. Wincheck v. Am. Express Travel Related Servs. Co., 232 S.W.3d 197,
206 (Tex. App.—Houston [1st Dist.] 2007, no pet.). However, the affiant generally
must explain how her employment confers personal knowledge about the matters on
which she testifies. Landmark Org., L.P. v. Tremco Inc., No. 03-07-00673-CV, 2010
WL 2629863, at *11 (Tex. App.—Austin June 30, 2010, no pet.) (mem. op.).
In her affidavit, Holleman did not represent that she had personal knowledge
of the facts. With respect to two particular facts about which she testified, she stated
that her testimony was made “to the best of my knowledge and belief.” This is
insufficient to show personal knowledge. Lindsay, 877 S.W.2d at 857; $485.00 in
U.S. Currency, 2014 WL 4364911, at *2. Nor did the contents of her affidavit
otherwise show her personal knowledge. Although Holleman testified that she was
an employee of the substitute trustee at the time of the events discussed in her
affidavit, she did not identify her position, state her job responsibilities, or explain
how either one gave her personal knowledge on the matters about which she
testified. The mere fact that she was employed by the substitute trustee in some
unidentified capacity was not enough to show personal knowledge. See Landmark
Org., 2010 WL 2629863, at *11. Holleman also did not represent that the facts stated
within the affidavit were true and correct. Given that her affidavit also did not
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demonstrate her personal knowledge, mere notarization of the document did not cure
this defect. See Churchill, 224 S.W.3d at 346–47; De La Garza, 2015 WL 1285702,
at *4. The Holleman affidavit does not show that it was based on personal
knowledge, does not represent that facts stated within it are true and correct, and is
not direct and unequivocal. The trial court therefore should have excluded it from
evidence. See Humphreys, 888 S.W.2d at 470–71.
In order to reverse the trial court’s judgment based on the erroneous admission
of the Holleman affidavit, Rust also must show that its admission probably caused
the rendition of an improper judgment. Codner, 40 S.W.3d at 674; Owens-Corning,
916 S.W.2d at 557. Holleman’s affidavit solely concerns the foreclosure on the
subject property. As previously discussed, Rust litigated supposed defects in the
foreclosure process in a separate lawsuit and her claims were resolved against her.
Rust, 573 F. App’x at 345–48. The trial court in this forcible-detainer action was
concerned only with deciding whether Bank of America had “the right to actual
possession.” TEX. R. CIV. P. 510.3(e). Rust contends that without the Holleman
affidavit, there was no evidence of the bank’s ownership of the property that would
support its right of possession. That’s incorrect. In addition to the Holleman
affidavit, which only addressed the regularity of the foreclosure, the bank introduced
without objection: a deed of trust signed by Rust providing that her status would be
that of a tenant at sufferance in the event of foreclosure; an assignment assigning the
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deed of trust to Bank of America; a substitute trustee’s deed stating that Rust had
defaulted and that Bank of America had purchased the property in a foreclosure sale;
and notice to vacate the property with proof of receipt. This proof was legally
sufficient to establish the bank’s ownership and corresponding right of possession.
See, e.g., Morris, 360 S.W.3d at 35; Middleton v. Crestar Mortg. Corp., No. 03-99-
006004-CV, 2000 WL 298694, at *4 (Tex. App.—Austin Mar. 23, 2000, no pet.)
(mem. op.).
Because Holleman’s affidavit was not necessary to establish the bank’s right
of possession, its admission into evidence could not have caused the rendition of an
improper judgment. Accordingly, its erroneous admission is not reversible error. See
Codner, 40 S.W.3d at 674; Owens-Corning, 916 S.W.2d at 557.
II. Attorney’s fees
Rust contends that the court erred by awarding attorney’s fees to Bank of
America. She argues that the bank failed to provide her the 10-day notice to vacate
required in order to recover fees under the forcible-detainer statute. See TEX. PROP.
CODE § 24.006(a).
The bank acknowledges that it did not provide 10 days’ notice. Instead, it
contends that the statutory notice period does not apply when a written lease provides
for recovery of attorney’s fees. See id. § 24.006(b). It argues that the deed of trust
constitutes a written lease and provides for the award of fees.
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Rust does not dispute that the deed of trust provides for the recovery of
attorney’s fees, but she argues that the deed of trust is not a “written lease” as
required under the statute.
Whether Bank of America may recover its attorney’s fees depends on an
interpretation of the forcible-detainer statute, specifically Section 24.006 of the
Property Code. This is a question of law which we review de novo. Lawrence v.
Reyna Realty Grp., 434 S.W.3d 667, 672 (Tex. App.—Houston [1st Dist.] 2014, no
pet.); Tex. Prop. & Cas. Guar. Ass’n v. Nat’l Am. Ins. Co., 208 S.W.3d 523, 533
(Tex. App.—Austin 2006, pet. denied).
In general, a party who successfully obtains possession of property in a
forcible-detainer action may recover its attorney’s fees, provided that it sent a
statutorily required notice to vacate at least 10 days before it filed suit. TEX. PROP.
CODE § 24.006(a). However, the notice requirement does not apply when “a written
lease entitles the landlord to recover attorney’s fees.” Id. § 24.006(a)–(b).
In the context of residential tenancies, the Property Code defines the term
“lease” as “any written or oral agreement between a landlord and tenant that
establishes or modifies the terms, conditions, rules, or other provisions regarding the
use and occupancy of a dwelling.” TEX. PROP. CODE § 92.001(3). The deed of trust
satisfies this definition. It provides that, if the subject property is sold as a result of
foreclosure, the borrower shall immediately surrender possession and that, if she
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fails to do so, she becomes a tenant at sufferance who may be removed by writ of
possession. This provision of the deed of trust—the very one entitling Bank of
America to possession—establishes or modifies the terms, conditions, rules, or other
provisions regarding the use and occupancy of the residential dwelling at issue.
Therefore, the trial court did not err by awarding Bank of America its attorney’s fees
under Section 24.006(b).
Conclusion
We hold that the trial court did not abuse its discretion by excluding the proof
relating to the validity of title or alleged defects in the foreclosure process, and that
the admission of the Holleman affidavit did not cause the rendition of an improper
judgment. We further hold that the trial court did not err by awarding the bank
attorney’s fees. We affirm the trial court’s judgment.
Michael Massengale
Justice
Panel consists of Chief Justice Radack and Justices Massengale and Brown.
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