John Thomas Aiken v. Angelique S. Naylor ( 2015 )

ACCEPTED
03-14-00519-CV
3972059
THIRD COURT OF APPEALS
AUSTIN, TEXAS
1/30/2015 4:13:46 PM
JEFFREY D. KYLE
CLERK
NO. 03-14-00519-CV
FILED IN
3rd COURT OF APPEALS
In The Court of Appeals AUSTIN, TEXAS
For the Third District Court of Appeals 1/30/2015 4:13:46 PM
Austin, Texas JEFFREY D. KYLE
Clerk
JOHN THOMAS AIKEN,
Appellant
v.
ANGELIQUE S. NAYLOR and
WELLS FARGO BANK, N.A.,
Appellees
ON APPEAL FROM THE 250TH JUDICIAL DISTRICT COURT, TRAVIS COUNTY, TEXAS
TRIAL COURT CAUSE NO. D-1-GN-13-003527
BRIEF OF APPELLEE ANGELIQUE S. NAYLOR
Russell Frost
State Bar No. 24063687
Law Office of Russell Frost
711 West 7th Street
Austin, Texas 78701
Tel: (512) 225-5590
Fax: (512) 692-2895
rfrost@russellfrostlaw.com
ATTORNEY FOR APPELLEE
ANGELIQUE S. NAYLOR
TABLE OF CONTENTS
TABLE OF CONTENTS .............................................................................................. ii
INDEX OF AUTHORITIES.....................................................................................iv
STATEMENT OF THE CASE .................................................................................vi
STATEMENT REGARDING ORAL ARGUMENT ........................................... viii
ISSUES PRESENTED ................................................................................................. ix
STATEMENT OF FACTS ............................................................................................ 1
SUMMARY OF THE ARGUMENT ........................................................................... 3
ARGUMENT ................................................................................................................. 5
A. Standard of Review – Texas Rule of Civil Procedure 166a.................. 5
B. Aiken failed to present to the trial court, and raises for the first time
on appeal, his contentions that the trial court erred in granting
summary judgment because the relief sought was in excess of what
Naylor was entitled to under the pleadings, and that the trial court
erred in granting judgment greater than the relief requested and not
based on grounds not asserted in the motion for summary judgment... 5
C. Naylor’s summary judgment motion was consistent with and
supported by the claims and factual allegations asserted in her First
Amended Counterclaim…..……………………………………..…….6
D. Aiken’s claims under the Texas Debt Collections Act, the Texas
Property Code, and for declaratory judgment are without merit, and
therefore, the trial court did not err in granting summary judgment in
favor of Naylor......................................................................................... 9
ii
E. There is no genuine issue of material fact as to who holds superior
title to the subject property, and therefore, the trial court’s grant of
summary judgment in favor of Naylor is correct................................. 13
F. Naylor’s claim for breach of contract is not barred by the statute of
limitations.... ........................................................................................... 15
G. Naylor is not barred by judicial estoppel from asserting a breach of
contract claim under the LWOP.... ....................................................... 17
H. Aiken’s standing argument is without merit ........................................ 19
CONCLUSION AND PRAYER................................................................................. 25
CERTIFICATE OF COMPLIANCE .......................................................................... 26
CERTIFICATE OF SERVICE.................................................................................... 27
iii
INDEX OF AUTHORITIES
CASES
Austin Nursing Ctr., Inc. v. Lovato,
171 S.W.3d 845, 849 (Tex. 2005) ..................................................................... 19
Besteman v. Pitcock,
272 S.W.3d 777, 784 (Tex. App.—Texarkana 2008, no pet.) .......................... 13
CKB & Assocs. v. Moore McCormack Petroleum, Inc.,
809 S.W.2d 577 (Tex. App.—Dallas 1991, writ denied) .................................. 17
Ethan's Glen Community Ass'n v. Kearney,
667 S.W.2d 287 (Tex. App.—Houston [1st Dist.] 1984, no writ) ...................... 9
Ferguson v. Bldg. Materials Corp. of Am.,
295 S.W.3d 642 (Tex. 2009) .............................................................................17
Gulf States Abrasive Manufacturing, Inc. v. Oertel, 489 S.W.2d 184
(Tex. Civ. App.—Houston [1st Dist.] 1972, writ ref'd n.r.e.) ...........................17
Horizon/CMS Healthcare Corp. v. Auld,
34 S.W.3d 887 (Tex. 2000) .................................................................................7
In re R.A.,
417 S.W.3d 569 (Tex. App.—El Paso 2013, no pet.) .............................18, 22
Kane v. Nat'l Union Fire Ins. Co.,
535 F.3d 380 (5th Cir. 2008) .............................................................................19
King Ranch, Inc. v. Chapman,
118 S.W.3d 742 (Tex. 2003) ...............................................................................5
Lopez v. Munoz, Hockema & Reed, L.L.P.,
22 S.W.3d 857 (Tex. 2000) ...............................................................................21
iv
Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,
289 S.W.3d 844 (Tex. 2009) ...............................................................................5
McConnell v. Southside ISD,
858 S.W.2d 337 (Tex. 1993) ............................................................................... 6
Nine Greenway Ltd. v. Heard, Goggan, Blair & Williams,
875 S.W.2d 784, 787 (Tex. App.—Houston [1st Dist.] 1994, writ denied) .....20
Nixon v. Mr. Prop. Mgmt. Co.,
690 S.W.2d 546 (Tex. 1985) ...............................................................................5
Nootsie Ltd. v. Williamson Cnty. Appraisal Dist.,
925 S.W.2d 659, 662 (Tex. 1996) ..................................................................... 20
Provident Life & Accident Ins. Co. v. Knott,
128 S.W.3d 211 (Tex. 2003) ...............................................................................5
Wells v. Dotson,
261 S.W.3d 275 (Tex. App.—Tyler 2008, no pet.)...........................................16
RULES AND STATUTES
11 U.S.C. § 522(b)(2) (2012) ................................................................................... 20
11 U.S.C. § 554(c) (2012) ........................................................................................ 19
TEX. CIV. PRAC. & REM. CODE ANN. ANN. § 16.035 (West 2014) ..................... 15
TEX. CIV. PRAC. & REM. CODE ANN. ANN. § 16.051 (West 2014) ............... 12, 15
TEX. CIV. PRAC. & REM. CODE ANN. § 16.069 (West 204) .........................4, 16–17
TEX. PROP. CODE ANN. § 5.062 (West 2014) ............................................... 11, 12
TEX. PROP. CODE ANN. §5.064 (West 2014)................................................ vii, 11
TEX. PROP. CODE ANN. § 5.076 (West 2014)............................................... vii, 11
v
TEX. PROP. CODE ANN. § 5.077 (West 2014)............................................... vii, 11
TEX. PROP. COD ANN. § 5.085(b) (West 2014) ............................................ vii, 11
TEX. R. CIV. P. 93 ............................................................................................. 20
TEX. R. CIV. P. 94 ............................................................................................. 17
TEX. R. CIV. P. 166a(c) ......................................................................................... 5–6
TEX. R. EVID. 106 ..................................................................................................... 18
TEX. R. EVID. 107 ..................................................................................................... 18
SESSION LAWS
Act of June 18, 2005, 79th Leg., R.S., ch. 978, §§ 2, 7(a), 2005 Tex. Gen. Laws
3280-81, 3285 (codified at Tex. Prop. Code § 5.062)....................................... 11
Act of May 21, 2001, 77th Leg., R.S. ch. 693, § 1, 2001 Tex. Gen. Laws 1319
(amended 2005) (current version at Tex. Prop. Code 5.062). ........................... 11
STATEMENT OF THE CASE
1.01 On October 10, 2013, Appellant John Thomas Aiken (“Aiken”) filed
suit against Appellee Angelique S. Naylor (“Naylor”) in the 250th Judicial District
of Travis County, Texas, seeking (1) quiet title to property in dispute; (2) damages
for alleged violations under the Texas Debt Collections Act (hereinafter “TDCA”);
(3) damages for alleged violations of the Texas Property Code §5.076, 5.077,
5.085(b), and 5.064; (4) alleged damages for Money Had Received and Unjust
Enrichment; and (5) Declaratory Relief.
vi
1.02 Naylor answered and filed counterclaims for breach of contract and
declaratory relief, among other claims and remedies.
1.03 On March 24, 2014, Naylor moved for summary judgment. In her
motion, Naylor sought summary judgment on the ground that, because it is
undisputed that Aiken failed to exercise his option to purchase in accordance the
terms of the lease agreement (hereinafter “LWOP”)—namely, the option was not
evidenced by a notice in writing addressed to the Lessor, sent by registered mail to
the address of the Lessor on or before April 1, 2009, or otherwise—Aiken had no
claim to title of the property in question, and thus Aiken’s claim to quiet title failed
as a matter of law. Naylor also requested summary judgment on her claim for
breach of contract on the ground that Aiken stopped making his monthly payments
to Naylor.
1.04 On June 5, 2014, the Honorable Gus Strauss rendered an order
granting Naylor’s motion for summary judgment.
1.05 On August 14, 2014, Judge Strauss rendered a final judgment that
incorporated the order of June 5, 2014. It is from this judgment that Aiken
appeals.
vii
STATEMENT REGARDING ORAL ARGUMENT
Naylor disputes the necessity for oral argument as this case involves only
well-settled principles of law and facts plainly apparent from the record.
viii
ISSUES PRESENTED
2.01 Did the trial court correctly grant Naylor’s motion for summary
judgment?
2.02 Did the trial court correctly dismiss Aiken’s claims for quiet title
where Aiken failed to exercise his option to purchase the property in accordance
with the terms of the lease and where Aiken has no other possible claim of title to
the property?
2.03 Did the trial court correctly grant summary judgment on Naylor’s
breach of contract counterclaim where it is undisputed that Aiken failed to pay
rent?
2.04 Did the trial court correctly grant summary judgment on Aiken’s
remaining claims because they have no basis in law or fact?
2.05 Did the trial court correctly find that Naylor’s claims were not barred
by the statute of limitations?
2.06 Is Naylor judicially estopped from asserting her claims in this lawsuit?
2.07 Does Naylor have standing to assert her counterclaim for breach of
contract in this lawsuit?
ix
TO THE HONORABLE COURT OF APPEALS:
STATEMENT OF FACTS
3.01 Naylor is the fee simple owner of real property located at 1101
Durham Drive in Austin, Travis County, Texas (“1101 Durham”). CR 133. On or
about April 30, 2004, Naylor and Aiken entered into a lease agreement with an
option to purchase the property (“LWOP”). CR 133, 139-45.
3.02 Section 5 of the LWOP required Aiken to pay Naylor $189,577.58 in
base rental payments, $5,000 of which was prepaid in cash and $184,577.58 of
which was tendered with a promissory note (“Note”) in favor of Naylor. CR 140.
In exchange, Naylor delivered possession of the property pursuant to the terms of
the LWOP. Id.
3.03 Paragraph 23 of the LWOP granted Aiken “the option to purchase the
leased property . . . prior to April 1, 2009” so long as the option was “evidenced by
a notice in writing addressed to the Lessor, sent by registered mail to the address of
the Lessor . . . .” CR 143-44. Deed to the property was never delivered to Aiken
and, instead, was held in escrow until Aiken exercised the option. CR 133-34, 136.
However, Aiken never exercised his option “by sending a notice in writing
addressed to [Naylor], sent by registered mail to the address of [Naylor]” (or
otherwise), nor did Aiken produce any evidence that he sent any such notice in
accordance with the terms of the contract, and the option is now expired as a
matter of law. See CR 134.
3.04 The Note, which was prepared in conjunction with the LWOP,
matured on April 30, 2009. CR 147. Pursuant to the Note, Aiken was required to
pay Naylor the entire principal of the Note upon maturity. Id. It is undisputed that
Aiken failed to make this payment to Naylor. CR 134.
3.05 To accommodate Aiken, Naylor began accepting rental payments
from Aiken so that Aiken could continue to reside on the property. It is undisputed
that, after July 2013, Aiken stopped making his rental payments although he
continues to reside at the property. Id. Shortly thereafter, Naylor filed an eviction
suit in the Justice Court. Aiken then filed this lawsuit to delay a ruling in the
Justice Court and to continue to reside on Naylor’s property without paying a dime
for it.
2
SUMMARY OF THE ARGUMENT
4.01 The trial court correctly granted Naylor’s motion for summary
judgment, and this Court should affirm that ruling.
4.02 Aiken failed to present to the trial court, and raises for the first time
on appeal, his contentions that the trial court erred in granting summary judgment
because the relief sought was in excess of what Naylor was entitled to under the
pleadings. This argument was not preserved and may not be considered as grounds
for reversal.
4.03 Contrary to Aiken’s claim that the summary judgment relief requested
by Naylor was not supported by her pleadings, the relief requested by Naylor is
identical to the express language of her First Amended Counterclaim. CR 108-12.
By basing her summary judgment arguments on the claims and factual allegations
made in her counterclaim, Naylor gave Aiken “fair notice” of her arguments and
her requested relief.
4.04 The trial court correctly granted Naylor a total summary judgment
rather than the partial summary judgment because Naylor clearly and expressly
argued that “all” of Aiken’s causes of action failed as a matter of law. CR 129-30.
4.05 There was no genuine issue of material fact as to who holds superior
title to the property in question because Aiken never exercised his option to
3
purchase the property in accordance with the terms of the LWOP. CR 133-34.
That option has expired, and Aiken has no other possible claim to title of the
property.
4.06 Naylor’s counterclaims are not barred by the statute of limitations.
The cause of action for failure to pay rents accrued in August 2013 when Aiken
stopped making rental payments, and the limitations period for breach of contract
is four years. CR 134. Alternatively, even if Naylor’s counterclaims had been
untimely, they were revived under section 16.069 of the Texas Civil Practice and
Remedies Code when Aiken filed his lawsuit regarding the same transaction on
which Naylor’s counterclaims are based, and Naylor filed her counterclaim within
30 days after the date on which her answer was required.
4.07 Aiken waived his judicial estoppel argument by failing to plead it to
the trial court.
4.08 Naylor does not lack standing or capacity to pursue her counterclaim
for breach of contract in this lawsuit.
4
ARGUMENTS AND AUTHORITIES
A. Standard of Review – Texas Rule of Civil Procedure 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 Texas Rule of Civil
Procedure 166a. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211,
215-16 (Tex. 2003). 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).
5.02 Appellate review of a no-evidence summary judgment is governed by
the same legal sufficiency standard as directed verdicts. King Ranch, Inc. v.
Chapman, 118 S.W.3d 742, 750 (Tex. 2003).
B. Aiken failed to present to the trial court, and raises for the first time on
appeal, his contentions that the trial court erred in granting summary
judgment because the relief sought was in excess of what Naylor was
entitled to under the pleadings, and therefore this argument may not be
considered as grounds for reversal.
5.03 In summary judgment practice, the non-movant must expressly
present to the trial court, by written answer or response, any issues defeating the
movant’s entitlement to summary judgment. Issues not so expressly presented to
5
the trial shall not be considered on appeal as grounds for reversal. TEX. R. CIV. P.
166a(c). McConnell v. Southside ISD, 858 S.W.2d 337, 353 (Tex.1993). Here,
Aiken did not present the cited issues to the trial court, and therefore, they are not
grounds for reversal.
C. Naylor’s summary judgment motion was consistent with and supported
by the claims and factual allegations asserted in her First Amended
Counterclaim.
5.04 Aiken’s first argument is that Naylor’s summary judgment motion
was not supported by her pleadings. As stated above, Aiken raises this issue for
the first time on appeal. In addition, Aiken claims that, while Naylor sought
summary judgment on her breach of contract claim on the ground that Aiken failed
to make his payments under the LWOP, such facts were not alleged in Naylor’s
pleadings.
5.05 Contrary to Aiken’s assertion, Naylor clearly and expressly alleges
that Aiken stopped making payments under the LWOP in paragraphs 10 and 11 of
Naylor’s First Amended Counterclaim: “To accommodate Plaintiff, Naylor began
accepting rental payments from Plaintiff so that he could continue to lease the
Property. . . . On or about July 2013, Plaintiff stopped making payments, and
Naylor filed an eviction suit in the Justice Court.” CR 109. Then, in paragraph 12
of her First Amended Counterclaim, Naylor expressly incorporated these factual
6
allegations into her allegations regarding her breach of contract claim. CR 109-10.
Accordingly, the factual allegations on which Naylor’s summary judgment motion
was based were expressly alleged in her pleadings, and Aiken’s argument is
without merit and should be rejected.
5.06 Moreover, Texas follows the “fair notice” standard for pleadings.
Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex. 2000) (quoting
Broom v. Brookshire Bros., Inc., 923 S.W.2d 57, 60 (Tex. App.—Tyler 1995, writ
denied). The relevant consideration under this standard is “whether the opposing
party can ascertain from the pleading the nature and basic issues of the controversy
and what testimony will be relevant.” Id. The purpose of the fair notice pleading
is to ensure that the opposing party has enough information to enable it to prepare a
defense against the claim. Id. at 897 (citing Roark v. Allen, 633 S.W.2d 804, 810
(Tex. 1982)). When the opposing party does not specially except to the pleadings,
the court should review the pleadings liberally in favor of the pleader. Id. Here,
Naylor’s pleading provided Aiken with adequate notice as to the nature and issues
of the controversy. Further, Aiken did not specially except to Naylor’s pleadings,
and therefore, this Court must construe Naylor’s pleadings liberally in favor of
Naylor. Id. For these reasons, Aiken had fair and adequate notice of the facts
7
upon which Naylor’s claims were based and the trial court’s grant of summary
judgment in favor of Naylor is correct.
5.07 Aiken also argues that Naylor’s request in her motion for declaratory
judgment—that no legitimate title dispute exists and that Naylor is not precluded
from pursuing her eviction lawsuit in the Justice Court—were not requested in her
pleadings. See Appellant’s Brief ¶ 5.08. Contrary to Aiken’s assertion, in
paragraph 23 of her First Amended Counterclaim, Naylor expressly requested this
exact relief:
Naylor requests that declaratory judgment be rendered under Chapter
37 of the Texas Civil Practice and Remedies Code as follows: . . . (c)
declaring the relationship of Naylor and [Aiken] is now that of Lessor
and Lessee, no legitimate title dispute exists, and Naylor is not
precluded to pursue her eviction action in the Justice Court.
CR 111 (emphasis added). Again, Aiken’s argument is refuted by the clear,
express language of Naylor’s pleadings. Therefore, the Court should reject
Aiken’s argument and affirm the trial court’s ruling.
5.08 Finally, Aiken argues that the trial court erred by enjoining Aiken
from “asserting any claim or interest in or to the Property or any part of it,”
claiming that the Court lacks authority for this order and that Naylor did not plead
for such relief. See Appellant’s Brief ¶ 5.14. Contrary to Aiken’s assertion, "[t]he
right to possession necessarily follows the adjudication of title, and the right to
8
such possession may be awarded in the title action . . . ." Ethan's Glen Community
Ass'n v. Kearney, 667 S.W.2d 287, 290 (Tex. App.—Houston [1 Dist.] 1984, no
writ). Thus, Appellant’s own assertion of a title contest opened the door to the
issue of possession, and therefore, it is appropriate and necessary to include in the
final judgment an order on the issue of possession. See Kearney, 667 S.W.2d at
290. Any order to the contrary would render moot the Court’s title determination.
5.09 In conclusion, as set forth above, Naylor’s motion for summary
judgment is entirely consistent with Naylor’s pleadings and, in fact, tracks the
express language of those pleadings. Aiken’s argument that Naylor’s summary
judgment was not supported by the pleadings is without any basis and offers this
Court no reason to reverse the trial court’s judgment.
D. Aiken’s claims under the Texas Debt Collections Act, under the Texas
Property Code, and for declaratory judgment are without merit, and
therefore, the trial court did not err in granting summary judgment in
favor of Naylor.
5.10 Aiken next argues that Naylor was entitled to only a partial summary
judgment because the motion did not specifically address some of Aiken’s claims
or Naylor’s counterclaim for “breach of the lease agreement.” See Appellant’s
Brief ¶ 5.12. First, with regard to Aiken’s claims, Naylor’s motion for summary
judgment clearly and expressly argued that judgment should be granted on all of
Aiken’s claims: “As a result, Plaintiff’s option to purchase expired, and Plaintiff is
9
without any legal or equitable claim to title. For this reason, all of Plaintiff’s
claims are without merit, he is merely a lessee, and Naylor is entitled to a no-
evidence summary judgment on Plaintiff’s claims.” CR 129-30 (emphasis added).
For this reason, Aiken’s argument fails.
5.11 Next, with respect to Aiken’s Debt Collection claim, Naylor moved
for traditional and no-evidence summary judgment based on her argument that
Aiken’s title contest is without merit, she owns 1101 Durham, and Aiken is merely
a lessee. CR 127-30. Consequentially, the trial court affirmed her argument and
ruled that the sale never occurred because Aiken failed to exercise his option. CR
407-09. If the sale never occurred, no debt exists, and Aiken is precluded from
establishing any of the elements to his Debt Collection claim, and thus Naylor is
entitled to summary judgment on that claim. In any event, Aiken provided no
evidence in support of his claim. For these reasons, the trial court did not err in
granting summary judgment in favor of Naylor with respect to Aiken’s Debt
Collections claim.
5.12 Next, with respect to Aiken’s Property Code violations, each of the
violations Aiken claims is predicated upon the existence of an executory contract.
See TEX. PROP. CODE § 5.064, 5.076, 5.077, 5.085(b). The current version of
section 5.062(a)(2) of the Property Code states that “an option to purchase real
10
property that includes or is combined or executed concurrently with a residential
lease agreement” is considered an executory contract for conveyance purposes.
TEX. PROP. CODE § 5.062(a)(2). However, that section, amended in 2005, applies
only to “an executory contract for conveyance entered into on or after January 1,
2006.” Act of June 18, 2005, 79th Leg., R.S., ch. 978, §§ 2, 7(a), 2005 Tex. Gen.
Laws 3280-81, 3285 (codified at Tex. Prop. Code § 5.062). See Exhibit C. In this
case, the parties executed the LWOP on or about April 30, 2004, over two years
prior to the applicability of the law upon which Aiken relies. The version of the
law in effect for purposes of the LWOP in this case makes no similar provision.
Act of May 21, 2001, 77th Leg., R.S. ch. 693, § 1, 2001 Tex. Gen. Laws 1319
(amended 2005) (current version at Tex. Prop. Code 5.062). See Exhibit D.
Therefore, the facts here fail to establish the existence of an executory contract,
chapter 5 of the Property Code is not applicable, and the trial court did not err in
granting summary judgment in favor of Naylor on Aiken’s various allegations of
Property Code violations.
5.13 Alternatively, at the time Aiken asserted his claims under the Property
Code on October 10, 2013, the option to purchase under the LWOP had already
expired under its own terms, rendering the contact—at best—a mere lease
agreement. Thus, the LWOP did not meet the criteria of even the current version
11
of section 5.062 by the time Aiken asserted his claim. Therefore, it was not an
executory contract, and chapter 5 of the Property code is not applicable.
5.14 Alternatively, Aiken’s Property Code claims are subject to a four-year
statute of limitations, and therefore, would be subject to the affirmative defense.
See TEX. CIV. PRAC. & REM. CODE ANN. § 16.051 (West 2014). For any of these
reasons, the trial court did not err in awarding Naylor summary judgment on
Aiken’s claims of Property Code violations.
5.15 Next, with respect to Naylor’s counterclaim for breach of contract,
Naylor’s motion for summary judgment specifically addresses that counterclaim.
See CR 109-10, 130. Naylor did not have a separate counterclaim for “breach of
the lease agreement,” and thus Aiken’s argument regarding this alleged claim is
without any basis whatsoever. Moreover, to the extent that Naylor’s breach of
contract claim was based on Aiken’s failure to make payments, Naylor’s motion
for summary judgment expressly addressed this allegation.
5.16 In summary, based on Aiken’s failure to establish a claim to title, the
pleadings on file, and the uncontroverted summary judgment evidence attached to
Nalyor’s Motion for Summary Judgment, Aiken’s claims are all without merit, and
therefore, the trial court correctly granted summary judgment in favor of Naylor.
12
E. There is no genuine issue of material fact as to who holds superior title
to the subject property, and therefore, the trial court’s grant of
summary judgment in favor of Naylor is correct.
5.17 Aiken argues that the trial court should not have granted summary
judgment because there were fact issues as to who holds superior title to the
property in question. See Appellant’s Brief ¶ 5.17. Contrary to his assertion, there
is no genuine issue of material fact as to who holds superior title to the property.
Unless and until Aiken successfully exercised his option to purchase, Naylor
retained superior title to the property. Cf. Besteman v. Pitcock, 272 S.W.3d 777,
784 (Tex. App.—Texarkana 2008, no pet.) (holding option period expired and
reversing trial court’s order of specific performance). No genuine issue of material
fact exists as to whether Aiken exercised his option to purchase or whether the
option expired because it is undisputed that the option was not evidenced by a
notice in writing addressed to the Lessor, sent by registered mail to the address of
the Lessor on or before April 1, 2009. Cf. id.; CR 134. Moreover, Aiken has no
other possible claim to title other than through the option that he failed to exercise.
Therefore, no genuine issue of material fact exists as to who holds superior title to
the property, and the trial court did not err in granting summary judgment in favor
of Naylor on this issue.
13
5.18 Next, no genuine issue of material fact exists as to whether execution
of the LWOP terminated the lease. Under section 5 of the LWOP, until Aiken
tendered full payment of the principal balance of the Note, rents under the lease
were due to Naylor. See CR 140. Since there is no genuine issue of material fact
as to Aiken’s failure to tender the principal balance of the Note, the lease remained
in effect. It follows that no genuine issue of material fact exists as to whether the
execution of the LWOP terminated the lease, and the trial court did not err in
granting summary judgment in favor of Naylor.
5.19 Further, to the extent that Aiken claims that that he had a claim to title
because he received a deed from Naylor for the property, that assertion is
completely unsupported by the record. To the contrary, no deed or deed of trust
was ever given to, delivered, or otherwise tendered to Aiken. Instead, pursuant to
the terms of the parties’ Document Escrow Agreement, the deed to the property
was held in escrow pending Aiken’s exercise of his option to purchase. CR 133-
34, 136. Since Aiken plainly failed to exercise his option, he never received the
deed, he was unable (and thus failed) to produce the original deed to the trial court,
and therefore, the undelivered deed cannot form the basis of any claim to title of
the property by Aiken. In sum, there is no genuine issue of material fact as to the
title of the property because Aiken failed to exercise his option to purchase and has
14
no other possible claim of title to the property, and therefore, the trial court’s
summary judgment was correct.
F. Naylor’s claims for breach of contract and declaratory judgment are
not barred by the statute of limitations.
5.20 Aiken next argues that Naylor’s claims are barred by limitations. See
Appellant’s Brief ¶¶ 5.21—.24. This argument is without merit.1 Naylor’s breach
of contract claim regarding the failure to pay rents did not accrue until Aiken
refused to pay rents after July 2013. CR 134. The applicable limitations period is
four years. TEX. CIV. PRAC. & REM. CODE §16.051. Here, Naylor filed her
counterclaim on October 13, 2013, and her first amended counterclaim on March
19, 2014, well within the four-year period. Therefore, her claim is not barred by
limitations, and Aiken’s argument must be rejected.
5.21 Alternatively, section 16.069 of the Texas Civil Practice and
Remedies Code provides as follows:
1
The statute cited by appellant—section 16.035 of the Texas Civil Practice
and Remedies Code—applies to a suit for the recovery of real property under a real
property lien or the foreclosure of a real property lien. TEX. CIV. PRAC. & REM.
CODE § 16.035. Naylor’s suit does not attempt to recover real property under a
real property lien or foreclose on a real property lien. Instead, her suit seeks
contractual damages and a declaratory judgment. CR 108-23. Also, the statute on
its face does not purport to apply to appellee's counterclaim for a declaratory
judgment.
15
If a counterclaim or cross claim arises out of the same transaction or
occurrence that is the basis of an action, a party to the action may file
the counterclaim or cross claim even though as a separate action it
would be barred by limitation on the date the party's answer is
required.
TEX. Civ. PRAC. & REM. CODE § 16.069(a). In order for a counterclaim to be
revived, the defendant must file the counterclaim no later than 30 days after the
answer is due. See id. § 16.069(b). The purpose of this section is to prevent a
party from waiting until an opponent’s valid claim that arises out of the same
transaction or occurrence is time-barred before asserting its own claim.2 Wells v.
Dotson, 261 S.W.3d 275, 281 (Tex. App. Tyler 2008, no pet.) (citing Hobbs
Trailers v. JT Arnett Grain Co., Inc., 560S.W.2d 85, 88-89 (Tex. 1977).
5.22 Here, Aiken filed his Original Petition on October 10, 2013, and an
Amended Petition on October 14, 2013. CR 4, 25. In these pleadings, Aiken
asserted claims related to the parties’ transaction regarding the property in
question, which is the same transaction upon which Naylor’s breach of contract
claim is based. CR 5-14, 26-33, 41. Naylor then filed her breach of contract
counterclaim in the same document as her Original Answer on November 13,
2013, which satisfies the 30-day requirement of section 16.069(b). CR 41. Since
2
Aiken attempted to get away with exactly the type of conduct this law was created
to protect against: waiting out your opponent’s valid claim in order to catch a
major windfall.
16
Naylor’s claims were revived under section 16.069, they were not barred by
limitations, and the trial court did not err in granting Naylor summary judgment on
her breach of contract counterclaim.
G. Aiken’s judicial estoppel argument was not specifically pled and
therefore is waived.
5.23 Aiken next argues that Naylor should be judicially estopped from
asserting any claims related to the parties’ transactions because she did not disclose
information related to the transactions in her 2010 bankruptcy proceedings. See
Appellant’s Brief ¶¶ 5.25—.35. Even assuming these allegations are true, Aiken
failed to plead the affirmative defense, and therefore, the defense is waived.3 TEX.
R. CIV. P. 94; CKB & Assocs. v. Moore McCormack Petroleum, Inc., 809 S.W.2d
577, 584 (Tex. App.—Dallas 1991, writ denied) (“Estoppel is an affirmative
defense. It is lost if not specifically pleaded.”); Gulf States Abrasive
Manufacturing, Inc. v. Oertel, 489 S.W.2d 184, 188 (Tex. Civ. App.—Houston
[1st Dist.] 1972, writ ref'd n.r.e.) (“Judicial estoppel is an affirmative defense, and
must be specially pleaded.”).
3
Even if Aiken had not waived the defense, judicial estoppel mandates that an
unfair advantage be sought by the party being estopped. See Ferguson v. Bldg.
Materials Corp. of Am., 295 S.W.3d 642, 643 (Tex. 2009). Surely it cannot be
argued that a landlord asserting her contractual rights in defending a claim of title
by her tenant is seeking an unfair advantage against that tenant who is seeking a
free house.
17
5.24 Alternatively, judicial estoppel does not apply. First, there was no
asset to disclose at the time of the filing of the case: the LWOP expired by its own
terms in 2009 prior to the filing of the bankruptcy case by Naylor in 2010 and,
therefore, Naylor had, or was entitled to, sole and undisputed possession of 1101
Durham at the time of the filing of the case. Second, even if there was an asset to
disclose, the issue was resolved when, in December 2013, Naylor voluntarily re-
opened her bankruptcy case and disclosed the literally worthless “asset.” Naylor
filed amended schedules in her case—specifically Schedules B and C—and, in an
“abundance of caution,” see Exhibit A at 5, disclosed the worthless asset. Naylor
now asks this Court to take judicial notice of the balance of the records from her
bankruptcy proceedings including the amended schedules, see Exhibit A, and the
docket report, see Exhibit B, for Cause No. 10-12009 filed in the United States
Bankruptcy Court, Western District of Texas, Austin Division. In re R.A., 417
S.W.3d 569, 576 (Tex. App.—El Paso 2013, no pet.); cf. TEX. R. EVID. 106, 107
(rule of optional completeness).
5.25 Third, the value of the asset is unequivocally zero. This is reflected in
Naylor’s amended bankruptcy schedules, see Exhibit A at 5, and plainly admitted
by Aiken, see CR 28 (Aiken states in live pleadings he “continued to mistakenly
make payments” on the property after April 2009) and CR 158 (Aiken refers to
18
LWOP as “a legal fiction” that “no longer exists”). Moreover, once the case was
reopened by the Bankruptcy Court and the amended schedules filed, the Chapter 7
Trustee concluded that the value of the claim was insignificant, which is
evidenced by the re-closing of the case on January 23, 2014, without issue. See
Exhibit B at 15. In other words, the Bankruptcy Trustee abandoned in favor of
Naylor any interest in the asset the Bankruptcy Estate may have had. See 11
U.S.C. 554(c) (2012). In summary, Aiken’s judicial estoppel argument, even if
preserved, is without merit.
H. Naylor has standing and capacity to assert her breach of contract claim.
5.26 Aiken’s final argument is that Naylor lacks standing to claim breach
of contract because she did not disclose the note, lease agreement, and Aiken’s
payments in her 2010 bankruptcy case. Citing Kane v. Nat’l Union Fire Ins. Co.,
535 F.3d 380, 385 (5th Cir. 2008), Aiken proposes that only the Bankruptcy
Trustee has standing to assert the breach of contract claim. Again, Aiken’s
argument is without merit.
5.27 First, Aiken confuses the concepts of standing and capacity. The
issue of standing focuses on whether a party has a sufficient relationship with the
lawsuit so as to have a justiciable interest in its outcome, whereas the issue of
capacity is conceived of as a procedural issue dealing with the personal
19
qualifications of a party to litigate. Austin Nursing Ctr., Inc. v. Lovato, 171
S.W.3d 845, 849 (Tex. 2005). A plaintiff has standing when it is personally
aggrieved, regardless of whether it is acting with legal authority; a party has
capacity when it has the legal authority to act, regardless of whether it has a
justiciable interest in the controversy. Id. at 848–49. Standing is a component of
subject matter jurisdiction and can never be waived. Id. at 849. Unlike standing,
however, “an argument that an opposing party does not have the capacity to
participate in a suit can be waived.” Nootsie Ltd. v. Williamson Cnty. Appraisal
Dist., 925 S.W.2d 659, 662 (Tex. 1996) (citing TEX. R. CIV. P. 93).
5.28 Here, Naylor—the named party in Aiken’s own lawsuit (as opposed to
the Bankruptcy Trustee who Aiken claims has exclusive interest in 1101
Durham)—is personally aggrieved by Aiken’s attempt to swindle her out of her
property. Thus, Aiken for the first time raises only an issue of capacity—not an
issue of standing. Because he raises this argument for the first time on appeal, it is
waived. Nine Greenway Ltd. v. Heard, Goggan, Blair & Williams, 875 S.W.2d
784, 787 (Tex. App.—Houston [1st Dist.] 1994, writ denied) (“A party who fails to
raise the issue of capacity through a verified plea waives that issue at trial and on
appeal.”).
20
5.29 Even if Aiken’s argument raises an issue of standing, which it does
not, Aiken’s own evidence demonstrates Naylor plainly listed the 1101 Durham
and the purchase money loan thereon on Schedules A and D, respectively, of her
Bankruptcy Petition Schedules. CR 212, 223. Further, 1101 Durham is property
exempted from the Bankruptcy Estate pursuant to title 11, section 522(b)(2) of the
United States Code. CR 219; 11 U.S.C. § 522(b)(2) (2012). Thus, this property is
not part of the Bankruptcy Estate and not subject to the control of the Bankruptcy
Trustee. Second, with regard to the Note, Naylor makes no attempt to enforce the
Note against Aiken in these proceedings or otherwise, and therefore, whether the
Note (assuming it is enforceable) was listed on the bankruptcy schedules is moot.
Third, Aiken is estopped from arguing the lease agreement should have been listed
on the bankruptcy schedules by his own live pleadings and arguments, which
plainly assert the LWOP is worthless. Cf. Lopez v Munoz, Hockema & Reed,
L.L.P., 22 S.W.3d 857, 864 (Tex. 2000) (“Quasi-estoppel precludes a party from
asserting, to another's disadvantage, a right inconsistent with a position previously
taken.”). Specifically, Aiken’s live pleadings state Aiken “continued to mistakenly
make payments” on the property after April 2009. CR 28 (emphasis added).
Further, Aiken calls the LWOP “a legal fiction” that “no longer exists . . . .” CR
158. In other words, Aiken himself admits the LWOP asset is worthless. For
21
Aiken to now assert for the first time that Naylor lacks standing based on alleged
facts he himself previously denied—namely, that the LWOP has value—spits in
the face of justice and puts Naylor at a disadvantage and, therefore, must be
precluded by estoppel.4 For these reasons, Naylor should not be denied standing to
assert her breach of contract claim against Aiken.
5.30 Alternatively, as discussed above, there was no asset to disclose at the
time Naylor filed her bankruptcy because the LWOP terminated by its own terms
in 2009 prior to the filing of the bankruptcy case in 2010.
5.31 Alternatively, even if there was an asset to disclose, the issue was
resolved when, in December 2013, Naylor re-opened her bankruptcy case and
disclosed the literally worthless “asset.” See Exhibit A at 5.5 Specifically, her
bankruptcy records reflect a voluntary reopening of her bankruptcy case, an
amended filing disclosing the LWOP agreement only in “an abundance of
caution,” and a subsequent closing of the bankruptcy proceedings without any
4
The record is void of any evidence showing that, at the time Naylor filed for
bankruptcy, she was receiving rental payments from Aiken. In any event, Naylor
has not sought recovery of past rents knowing such a claim is void of value, and
therefore, whether Naylor listed the rental payments on her bankruptcy schedules
is moot.
5
Again, Naylor asks this Court to take judicial notice of the balance of the
records from her bankruptcy proceedings, Cause No. 10-12009 filed in the United
States Bankruptcy Court, Western District of Texas, Austin Division, which
Naylor filed prior to Aiken ever raising an issue of standing. In re R.A., 417
S.W.3d 569, 576 (Tex. App.—El Paso 2013, no pet.) (generally, appellate courts
take judicial notice of facts outside the record only to determine jurisdiction).
22
substantive action taken by that Court or the Bankruptcy Trustee. More
specifically, Naylor’s amended filing in that matter describes the asset as follows:
Expired Lease with an option to purchase with John Thomas Aiken in
the form of a "Wally Wrap" dated April 30, 2004. Contract expired by
its own terms on April 30, 2009 as Aiken was unable to obtain his
own financing as required by the terms of the contract prior to that
time. Aiken was also in default as he had missed several payments on
the property prior to that time. Although this contract expired by its
own terms well prior to the filing of this case and is therefore
valueless and unenforceable, it is listed here out of an abundance of
caution. The real property subject to this expired lease is now owned
entirely by Debtor. Debtor may have a possible claim against Aiken
for the missed payments, but since so much time had passed between
the expiration of the contract and the filing of the case, Debtor
considers this claim to be valueless, too.
See Exhibit A. Thus, contrary to Aiken’s position, the asset was disclosed even
though all parties—including Aiken—agreed it was worthless.
5.32 Alternatively, even if Naylor did not have standing to assert the
breach of contract claim in her original counterclaims, filed November 13, 2013,
she certainly had standing after her bankruptcy schedules were amended December
18, 2013, and the bankruptcy case re-closed January 23, 2014. To be sure, on
March 19, 2014, Naylor reasserted her breach of contract claim by filing her First
Amended Counterclaim. CR 108.
5.33 Alternatively, there is at best a fact issue with regard Naylor’s
standing to sue for breach of contract on the LWOP, and this Court should remand
23
this sole issue to the trial court to make findings of fact regarding Naylor’s
capacity to file suit and otherwise affirm the judgment of the trial court.
24
CONCLUSION AND PRAYER
For the reasons stated above, Appellee respectfully requests that this Court
(1) affirm the trial court’s Final Judgment, including the trial court’s awards of
attorneys’ fees, and (2) grant Appellee such other and further relief, either at law or
in equity, to which she is entitled.
Respectfully submitted,
/s/ Russell Frost
Russell Frost
State Bar No. 24063687
Law Office of Russell Frost
711 West 7th Street
Austin, Texas 78701
Tel: (512) 225-5590
Fax: (512) 692-2895
rfrost@russellfrostlaw.com
ATTORNEY FOR APPELLEE
ANGELIQUE S. NAYLOR
25
CERTIFICATE OF COMPLIANCE
I hereby certify that Appellee’s Brief complies with the word count limit of
Texas Rule of Appellate Procedure 9.4(i)(2)(B). Excluding the contents listed in
Texas Rule of Appellate Procedure 9.4(i)(1), this Brief contains 5481 words, as
counted by Microsoft Word.
/s/ Russell Frost
Russell Frost
26
CERTIFICATE OF SERVICE
This is to certify that on the 30th day of January, 2015, a true and correct
copy of the above and foregoing was forwarded to all counsel of record in
accordance with the Texas Rules of Civil and Appellate Procedure:
WILLIAM B. GAMMON, SBN: 07611280
KARLA HUERTAS, SBN: 24087765
GAMMON LAW OFFICE, PLLC.
COUNSEL FOR APPELLANT
1201 Spyglass Drive, Suite 100
Austin, Texas 78746
Phone: 512-444-4529
Fax: 512-545-4279
/s/ Russell Frost
Russell Frost
27