Opinion
01-22-00397-CV
05-09-2023
JAMES P. ARTHUR AND MARY ARTHUR, Appellants v. NITI PROPERTIES LLC, Appellee
On Appeal from County Civil Court at Law No. 3 Harris County, Texas Trial Court Case No. 1160894
Panel consists of Justice Landau, Countiss, and Guerra.
MEMORANDUM OPINION
Amparo Guerra Justice
This appeal arises from the foreclosure of the real property located at 7639 Beechnut, in Houston, Texas. Appellants James P. Arthur and Mary Arthur (the Arthurs) sued appellee Niti Properties LLC after it purchased the property at a foreclosure sale, seeking recission of title and damages for wrongful foreclosure, unjust enrichment, and conspiracy. The county court at law dismissed the case for lack of subject matter jurisdiction, and the Arthurs appealed. In their sole issue, they contend that the county court erred in dismissing their suit because it has jurisdiction to decide issues related to title of real property and its jurisdiction is not limited by the amount in controversy. We reverse and remand.
The litigation related to the property that is the subject of this appeal has worked its way through numerous courts resulting in a myriad of proceedings and orders, including the judgment in this case. A detailed recitation of the facts in those cases is unnecessary for the disposition of this appeal.
The Arthurs purchased a multi-unit assisted living facility located at 7639 Beechnut, in Houston, Texas (the property). They decided to renovate the property and, in 2006, one of their limited partnerships borrowed $774,000 for this purpose. When the loan payments became delinquent, the lender sought to foreclose on the property.
See Paradise Living, Inc. v. Blackburne & Brown Mortg. Fund I, 01-18-00194-CV, 2019 WL 2426168, at *1 (Tex. App.-Houston [1st Dist.] June 11, 2019, no pet.) (mem. op.).
On November 5, 2019, Niti Properties purchased the property for $550,000 at a foreclosure sale conducted by the Harris County Constable. Following the sale, Niti Properties provided notice to the Arthurs to vacate the property. The Arthurs failed to vacate, and Niti Properties filed a forcible detainer action in the justice of the peace court. The justice court rendered judgment in favor of Niti Properties, and the Arthurs appealed the judgment to the county court at law.
In the county court, Niti Properties moved for summary judgment asserting that it had established as a matter of law its right to immediate possession of the property superior to the Arthurs. The county court granted Niti Properties' motion but later withdrew its order and signed an amended final judgment awarding possession of the property to the Arthurs.
In its order, the county court found that Niti Properties had purchased the property at a restrained foreclosure sale while an amended temporary restraining order was valid and in place.
Niti Properties appealed the county court's judgment challenging the propriety of the order awarding possession to the Arthurs. The Fourteenth Court of Appeals concluded that the county court erred in awarding immediate possession of the property to the Arthurs without conducting a trial de novo, reversed the judgment of the county court, and remanded the case for a trial de novo to determine "if title to the property is so intertwined with possession that the justice court lacked jurisdiction over the dispute, or which party has the superior title to possession." Niti Props. LLC v. Arthur, No. 14-20-00770-CV, 2022 WL 220209, at *5 (Tex. App.- Houston [14th Dist.] Jan. 25, 2022, no pet.) (mem. op.). On remand, the county court concluded that title and possession were inextricably intertwined and dismissed the forcible detainer action for lack of subject matter jurisdiction. Niti Properties appealed the judgment dismissing its forcible detainer action. That appeal is currently pending in the Fourteenth Court of Appeals.
During the course of those proceedings, the Arthurs filed the underlying suit against Niti Properties seeking recission of title and asserting claims for wrongful foreclosure, unjust enrichment, and conspiracy. In their petition, under "Jurisdiction," the Arthurs alleged that "[t]his Court has jurisdiction over the subject matter of this litigation relating to real property located in Harris County, Texas. See Texas Government Code Section 25.10332(d)(1); stating that the Harris County courts at law have jurisdiction to decide the issue of title and hear suit for recovery of real property." The Arthurs alleged that Niti Properties purchased the property for $550,000 and that the property was valued at $1,250,000. They further alleged that Niti Properties "claims to or purports to have title to the property based on the wrongful/restrained foreclosure sale/purchase." The Arthurs asserted the following causes of action:
A.RECISSION OF TITLE: To the extent to which title may have been transferred to defendant due to the restrained foreclosure sale, Arthur[]s[] seek a Recission of said title such that it reverts to them.
B.WRONGFUL FORECLOSURE: The foreclosure sale\purchase of November 5, 2019 was restrained. This is established as the law of the case. The purchase was grossly inadequate, and the deficiency was\is even more than the purchase price. The case law is settled that this wrongful foreclosure should be reversed.
C. UNJUST ENRICHMENT: Defendant and his\its co-conspirators, partners or those who acted in concert with it\him
would be [] unjustly enriched. To convert to themselves, Arthurs work and investments of about 30 years in less than one hour and with one wrongful transaction is untenable. . . .
D. CONSPIRACY: Defendant and one or more of his co-conspirators were in communication up to and including on the day of the purchase and after the TRO [temporary restraining order] had been entered by the Hon[orable] Judge Reeder. Their sale\purchase of the property after the entry of the TRO was an illegal act on which they had a meeting of the minds.Niti Properties answered asserting a general denial and several affirmative defenses.
The case was set for a bench trial on November 22, 2021. The Arthurs did not appear for trial. On Niti Properties' oral motion, the trial court dismissed the case for lack of subject matter jurisdiction. In its November 23, 2021 order, the trial court stated: "After [] considering the argument of the Defendant in support of its oral motion to dismiss, the Court agrees that it lacks jurisdiction over this case because the amount in controversy exceeds the statutory limitations of the Harris County Court at Law."
The Arthurs moved for a new trial and to set aside the final judgment, arguing that they did not receive notice of the trial setting. Niti Properties responded to the motion and re-urged its motion to dismiss for lack of jurisdiction. The Arthurs filed supplemental briefing arguing that the county court had jurisdiction over their lawsuit. The trial court granted the Arthurs' motion for new trial.
Following a hearing on Niti Properties' motion to dismiss, the county court entered an order dismissing the case for lack of subject matter jurisdiction on April 25, 2022. This appeal followed.
Subject Matter Jurisdiction
In their sole issue, the Arthurs contend that the county court erred in dismissing their suit for lack of subject matter jurisdiction because county courts have jurisdiction to decide issues related to title of real property and their jurisdiction is not limited by the amount in controversy.
A. Standard of Review
Subject matter jurisdiction is essential to the authority of a court to decide a case. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 553-54 (Tex. 2000); see also In re United Servs. Auto. Ass'n, 307 S.W.3d 299, 309 (Tex. 2010) ("A judgment is void if rendered by a court without subject matter jurisdiction."). Subject matter jurisdiction cannot be waived or conferred by agreement, and it may be raised at any point during the proceeding. Anderson v. Truelove, 446 S.W.3d 87, 91 (Tex. App.-Houston [1st Dist.] 2014, no pet.) (quoting Rusk State Hosp. v. Black, 392 S.W.3d 88, 103 (Tex. 2012)). The pleader must allege facts that affirmatively demonstrate the trial court's jurisdiction to hear the case. Id. If a trial court does not have subject matter jurisdiction, it cannot decide a case's merits. See Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.3d 440, 443 (Tex. 1993). Whether subject matter jurisdiction exists is a question of law that we review de novo. City of Houston v. Rhule, 417 S.W.3d 440, 442 (Tex. 2013); Sohani v. Sunesara, 546 S.W.3d 393, 402 (Tex. App.-Houston [1st Dist.] 2018, no pet.).
As the plaintiffs, the Arthurs had the burden to affirmatively demonstrate the trial court's jurisdiction. See Heckman v. Williamson Cty., 369 S.W.3d 137, 150 (Tex. 2012). When assessing a jurisdictional plea, our analysis begins with the live pleadings. Id. We construe the pleadings liberally in the plaintiff's favor, accept all factual allegations as true, and look to the plaintiff's intent. Id. We may also consider evidence submitted to negate the existence of jurisdiction, and we must consider such evidence when necessary to resolve the jurisdictional issue. Id.
B. Applicable Law
County courts at law are courts of "limited jurisdiction." United Servs. Auto. Ass'n v. Brite, 215 S.W.3d 400, 401 (Tex. 2007); Garrett Operators, Inc. v. City of Hous., 360 S.W.3d 36, 44 (Tex. App.-Houston [1st Dist.] 2011, pet. denied). Jurisdiction in county courts at law is not presumed, and therefore "the authority to adjudicate the claims presented must be established at the outset of the case." Sohani, 546 S.W.3d at 402 (quoting Abdullatif v. Erpile, LLC, 460 S.W.3d 685, 691 (Tex. App.-Houston [14th Dist.] 2015, no pet.) (citations omitted)).
Texas Government Code Section 25.0003, which is generally applicable to county courts at law, provides that "[a] statutory county court has jurisdiction over all causes and proceedings, civil and criminal, original and appellate, prescribed by law for county courts." Tex. Gov't Code § 25.0003(a). Under this section, "a statutory county court exercising civil jurisdiction concurrent with the constitutional jurisdiction of the county court has concurrent jurisdiction with the district court in . . . civil cases in which the matter in controversy exceeds $500 but does not exceed $250,000 . . . as alleged on the face of the petition." Id. § 25.0003(c)(1). "The jurisdictional statute for county courts at law values the matter in controversy on the amount of damages 'alleged' by the plaintiff, not on the amount the plaintiff is likely to recover." Brite, 215 S.W.3d at 402-03; Tune v. Tex. Dep't of Pub. Safety, 23 S.W.3d 358, 361 (Tex. 2000) ("It has long been the law that the phrase 'amount in controversy,' in the jurisdictional context, means 'the sum of money or the value of the thing originally sued for . . . .'") (emphasis in original); Eris v. Giannakopoulos, 369 S.W.3d 618, 622 (Tex. App.-Houston [1st Dist.] 2012, pet. dism'd) ("To determine the amount in controversy, courts of appeals generally look to the allegations in the plaintiff's petition.").
Government Code Section 25.1032 contains provisions specific to the Harris County civil courts at law. In particular, Subsection 25.1032(d)(1) provides: "In addition to other jurisdiction provided by law," the county civil courts at law have jurisdiction to "decide the issue of title to real or personal property[.]" Tex. Gov't Code § 25.1032(d)(1); see also id. § 25.0001(a) (providing that if general provision relating to all statutory county courts conflicts with specific provision for particular court or county, specific provision controls). This section "bases the county civil courts' jurisdiction on the type of claim, not the amount of money in dispute." AIC Mgmt. v. Crews, 246 S.W.3d 640, 644 (Tex. 2008) (construing Government Code section 25.1032(c)(1), which was later renumbered to 25.1032(d)(1)). The Harris County civil courts at law have jurisdiction to decide issues of title "in addition to their general concurrent jurisdiction described in section 25.0003(c)" and it "is not dependent upon the amount in controversy." Id.; Sohani, 546 S.W.3d at 403.
C. Analysis
The Arthurs contend that the county court at law has jurisdiction over their suit because Section 25.1032(d)(1) confers jurisdiction on Harris County civil courts at law to decide issues of title to real property regardless of the amount in controversy. They point to the causes of action in their petition for "recission of title" and wrongful foreclosure in support of their assertion that the county court has jurisdiction over their suit. Niti Properties responds that the Arthurs' claims fall under the general jurisdictional limits of Section 25.0003(c)(1), rather than the additional jurisdictional provision of Section 25.1032(d)(1). They argue that the Arthurs' petition alleges that the property was worth at least $1,250,000 at the time of the foreclosure sale, and that Niti Properties purchased the property for $550,000.
Thus, they reason, the amount in controversy exceeds the county court's jurisdictional limit of $250,000.
The Arthurs sued Niti Properties for wrongful foreclosure. They alleged that the foreclosure of the property occurred in violation of a temporary restraining order, the property was worth at least $1,250,000, and that Niti Properties purchased the property for a grossly inadequate price, i.e., $550,000. They further stated that "to the extent to which title may have been transferred to [Niti Properties] due to the restrained foreclosure sale, [the] Arthurs[] seek a Recission of said title such that it reverts to them."
"The elements of a wrongful foreclosure claim are: (1) a defect in the foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal connection between the defect and the grossly inadequate selling price." Green v. Fed. Nat. Mortg. Ass'n, No. 01-18-00258-CV, 2019 WL 1716347, at *2 (Tex. App.-Houston [1st Dist.] Apr. 18, 2019, pet. denied) (mem. op.) (quoting Sauceda v. GMAC Mortg. Corp., 268 S.W.3d 135, 139 (Tex. App.- Corpus Christi 2008, no pet.)); see also Calegon v. 2009 SWE, LLC, No. 01-16-00596-CV, 2017 WL 4288076, at *3 (Tex. App.-Houston [1st Dist.] Sept. 28, 2017, no pet.) (mem. op.).
"Wrongful foreclosure is an issue related to title to real property." Floyd v. Gateway Mortg. Grp., No. 02-19-00356-CV, 2021 WL 924707, at *3 (Tex. App.- Fort Worth Mar. 11, 2021, no pet.) (mem. op.); see Villalon v. Bank One, 176 S.W.3d 66, 71 (Tex. App.-Houston [1st Dist.] 2004, pet. denied) ("The landlord-tenant relationship established in the deed of trust provided a basis for the county court to determine that [the bank] had the right to immediate possession without resolving whether [the bank] wrongfully foreclosed on the property, an issue relating directly to who has title to the property." (emphasis added)). Indeed, Niti Properties acknowledges in its brief that the Arthurs' claims seek to decide the issue of title to property: "Here, the claims, when taken together, establish on their face that title to the Property at issue is not the only relief [the Arthurs] have sought in the County Court."
Because the Harris County civil courts at law have jurisdiction to determine issues relating to title to real property, the trial court had subject matter jurisdiction to determine whether Niti Properties wrongfully foreclosed on the property. See Floyd, 2021 WL 924707, at *3 (holding trial court erred in dismissing plaintiff's suit for lack of subject matter jurisdiction where plaintiff asserted claim for wrongful foreclosure: "Because this is a suit to decide the issue of title to real property, Tarrant County Court at Law No. 1 has subject-matter jurisdiction over the case because the jurisdiction provided by [Government Code] Section 25.2222(b)(5) is based on the suit's subject matter, not the amount in controversy."); Sohani, 546 S.W.3d at 404 (concluding Harris County civil court at law had subject matter jurisdiction in declaratory judgment action to determine whether plaintiff was member of limited liability companies (LLC) and whether he was entitled to profits from LLCs because court had jurisdiction to determine issues relating to title to real and personal property, membership interest in LLC was personal property, and membership interest included member's share of profits and losses); Parham Family Ltd. P'ship v. Morgan, 434 S.W.3d 774, 783-84 (Tex. App.-Houston [14th Dist.] 2014, no pet.) (concluding trial court had jurisdiction over plaintiff's fraudulent transfer claim, even though value of property alleged to have been fraudulently transferred exceeded county court at law's jurisdictional maximum amount in controversy, because county court had jurisdiction to "decide the issue of title to real or personal property" and plaintiff sought determination of whether title to property remained with corporation or had been conveyed to another). The trial court erred by dismissing the Arthurs' case for lack of subject matter jurisdiction.
Accordingly, we sustain the Arthurs' issue.
Conclusion
We reverse the trial court's judgment dismissing the case and remand the case to the trial court.