Summary
holding that challenges to the validity of a foreclosure sale do not deprive the justice or county court of jurisdiction because plaintiffs in a forcible detainer action need only present sufficient evidence of ownership to demonstrate a superior right to immediate possession to prevail
Summary of this case from In re GuzmanOpinion
NO. 14-15-00651-CV
04-04-2017
ISSAC COOK AND NAKIA COOK, Appellants v. MUFADDAL REAL ESTATE FUND, Appellee
On Appeal from County Civil Court at Law No. 1 Harris County, Texas
Trial Court Cause No. 1064435
MEMORANDUM OPINION
In this forcible detainer case, appellants Issac Cook and Nakia Cook appeal a judgment that granted possession of their property to a foreclosure-sale purchaser, appellee Mufaddal Real Estate Fund. Appellants present three issues on appeal. First, they contend that the county court at law erred in denying their motion to abate and plea to the jurisdiction. Next, appellants contend the county court at law erred in refusing to consider appellants' Rule 12 motion to show authority. Last, appellants contend the county court at law lacked sufficient evidence that there was an actual foreclosure on their home. For the reasons set forth below, we affirm.
I. Background
Due to the limited evidence introduced at trial, we utilize the clerk's record to supplement the background facts when those facts do not appear to be in dispute.
In 2007, appellant Nakia Cook purchased a home located in Houston, Harris County. Appellant obtained a thirty-year loan from Lehman Brothers Bank that was secured by a promissory note and deed of trust. The deed of trust recited that:
Nakia Cook was the borrower and grantor of the Deed of Trust. Issac Cook is her spouse and the premises is his homestead.
If the Property is sold pursuant to this Section 22, Borrower or any person holding possession of the Property through Borrower shall immediately surrender possession of the Property to the purchaser at that sale. If possession is not surrendered, Borrower or such person shall be a tenant at sufferance and may be removed by writ of possession or other court proceeding.On or around 2011, the deed of trust was assigned to Aurora Bank. In 2012, Aurora Bank assigned the deed of trust to Nationstar Mortgage.
Section 22 of the deed of trust deals with acceleration and remedies arising from a breach of the agreement by the borrower; it requires the lender to provide notice prior to acceleration and an opportunity to cure the default before invoking its power of sale.
In 2009, appellants defaulted on their mortgage. In 2010, appellants maintain they filed suit in Harris County district court against Aurora Bank for fraud. Appellants assert that in 2015 they sought a temporary restraining order in district court trying to stop foreclosure on the property, which was denied. According to appellants, Nationstar Mortgage filed an answer, counterclaim, and third-party claim seeking judicial foreclosure and writ of possession on the property. Appellants argue that Nationstar Mortgage's counterclaim indicates that title to the property belongs to Nationstar Mortgage and not appellee.
Nationstar Mortgage foreclosed on appellants' property. In April 2015, appellee bought the property from a substitute trustee at a nonjudicial foreclosure sale and recorded a substitute trustee's deed. On May 6, 2015, appellee sent notice to appellants to vacate the property, but appellants did not do so. Appellee filed a forcible detainer suit against appellants in the justice court of Harris County, Precinct 7, Place 1, on May 11, 2015. Appellants also filed a motion to abate and plea to the jurisdiction as well as a Rule 12 motion to show authority.
On June 11, 2015, the justice court determined that appellants had committed a forcible detainer and granted appellee immediate possession of the property. The record does not reflect that the justice court ruled on appellants' motion to abate and plea to the jurisdiction or Rule 12 motion to show authority. Appellants then appealed the judgment to Harris County Civil Court at Law No. 1, seeking a trial de novo.
In the county court at law, on July 24, 2015, prior to trial, appellants again presented their motion to abate and plea to the jurisdiction. Appellants argued that the county court at law lacked jurisdiction because of the pending title dispute between appellants and Nationstar Mortgage, and therefore the county court at law should dismiss or, in the alternative, abate the forcible detainer proceedings until the district court resolved the issues of title to the property. After a hearing, the county court at law denied appellants' plea to the jurisdiction and plea in abatement and tried the case on the merits.
At the bench trial, as proof that appellants had committed a forcible detainer and appellee was therefore entitled to the property, appellee presented as evidence: (1) the original deed of trust containing a tenancy at sufferance clause; (2) the substitute trustee's deed to appellee; and (3) proof of its demand to appellants to vacate the property. The evidence was admitted without objection. The county court signed a judgment awarding possession to appellee on July 24, 2015. Appellants timely filed a notice of appeal.
The county court at law took judicial notice of the original deed of trust, including the tenancy sufferance clause in paragraph 22, which was attached to appellants' motion to abate and plea to the jurisdiction as Exhibit B.
II. Analysis
A. The county court at law had subject-matter jurisdiction over the forcible detainer suit.
In their first issue, appellants contend that the county court erred in denying their plea to the jurisdiction. Appellants argue that the county court lacked jurisdiction and should have transferred the case to the district court where title issues already were pending.
Whether a court has subject-matter jurisdiction is a question of law we review de novo. Espinoza v. Lopez, 468 S.W.3d 692, (Tex. App.—Houston [14th Dist.] 2015, no pet.) (citing Salaymeh v. Plaza Centro, LLC, 264 S.W.3d 431, 435 (Tex. App.—Houston [14th Dist.] 2008, no pet.)). Jurisdiction to hear a forcible detainer action is vested in the justice court of the precinct where the property is located and, on appeal, in the county court at law for trial de novo. See Tex. Prop. Code § 24.004(a); Black v. Wash. Mut. Bank, 318 S.W.3d 414, 416 (Tex. App.—Houston [1st Dist.] 2010, pet. dism'd w.o.j.). Notwithstanding the grant of general jurisdiction to a county court at law, in an appeal of a forcible detainer judgment, the county court's jurisdiction extends only as far as the justice court's jurisdiction. Salaymeh, 264 S.W.3d at 435.
"An action for forcible detainer is a 'summary, speedy, and inexpensive remedy for the determination of who is entitled to the possession of premises.' " Espinoza, 468 S.W.3d at 695 (quoting Scott v. Hewitt, 127 Tex. 31, 90 S.W.2d 816, 818-19 (1936)) accord Yarbrough v. Household Fin. Corp., III, 455 S.W.3d 277, 280 (Tex. App.—Houston [14th Dist.] 2015, no pet.). A forcible detainer action is the procedure by which the right to immediate possession of real property is determined; the merits of title are not adjudicated. Id. (citing Salaymeh, 264 S.W.3d at 435). Justice courts do not have jurisdiction to determine or adjudicate title to land, and in forcible detainer actions, neither does a county court at law exercising appellate jurisdiction. Id.; see also Tex. Gov't Code § 27.031(b)(4). Therefore, plaintiffs in forcible detainer actions must be able to "show sufficient evidence of ownership to demonstrate a superior right to immediate possession" without relying on title. Goggins v. Leo, 849 S.W.2d 373, 377 (Tex. App.—Houston [14th Dist.] 1993, no writ).
When there are issues concerning both title and possession, the issues may be litigated in separate proceedings in different courts with appropriate jurisdiction. Salaymeh, 264 S.W.3d at 436. "However, when a forcible detainer action presents a genuine issue of title so intertwined with the issue of possession that a trial court would be required to determine title before awarding possession, then a justice court lacks jurisdiction to resolve the matter." Espinoza, 468 S.W.3d at 695 (citing Pinnacle Premiere Props., Inc. v. Breton, 447 S.W.3d 558, 564 (Tex. App.—Houston [14th Dist.] 2014, no pet.) (op. on reh'g)). Accordingly, a justice court or county court at law is not deprived of jurisdiction in a forcible detainer action merely because of the existence of a title dispute; only when the right to immediate possession necessarily requires resolution of the title dispute is a justice court or county court at law deprived of jurisdiction. See Espinoza, 468 S.W.3d at 695 (citing Salaymeh, 264 S.W.3d at 435).
Where there are grounds for determining immediate possession independent from title, the justice court and county court at law will have jurisdiction to hear the forcible detainer action. See, e.g., Rice v. Pinney, 51 S.W.3d 705, 711-12 (Tex. App.—Dallas 2001, no pet.). If a deed of trust provides that in the event of foreclosure, the previous owner will become a tenant at sufferance if he does not surrender possession, the trial court can resolve possession without resort to title. Salaymeh, 264 S.W.3d at 436. "Tenant-at-sufferance clauses separate the issue of possession from the issue of title." Breton, 447 S.W.3d at 564. "Under these provisions, a foreclosure sale transforms the borrower into a tenant at sufferance who must immediately relinquish possession to the foreclosure-sale purchaser." Id.
In such cases, the need to introduce the deed of trust in order to prove the landlord-tenant relationship does not affect the justice (or county) court at law's jurisdiction because "the validity of the title so developed is not in issue." Haith v. Drake, 596 S.W.2d 194, 197 (Tex. App.—Houston [1st Dist.] 1980, writ ref'd n.r.e.). The landlord-tenant relationship suffices as a basis for the forcible detainer action even though the deed of trust may later be set aside for wrongful foreclosure or other reasons. Villalon v. Bank One, 176 S.W.3d 66, 71 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) (citing Dormady v. Dinero Land & Cattle Co., 61 S.W.3d 555, 559 (Tex. App.—San Antonio 2001, pet. dism'd w.o.j.)).
In this case, appellee introduced sufficient evidence to establish a superior right to possession of the residence without relying upon resolution of the title issue. Appellee presented the Substitute Trustee's Deed showing it had purchased the property at the foreclosure sale, the Deed of Trust containing a tenant-at- sufferance clause, the notice to vacate, and testimony asserting the notice was sent to appellants.
Appellants do not challenge the sufficiency of the notice.
Appellants assert that the justice court and county court at law lacked jurisdiction because the issues of title and possession are inextricably intertwined. Specifically, appellants contend that no foreclosure occurred and that appellee is not a bona fide purchaser. Appellants' position is based on the counterclaim Nationstar Mortgage filed in district court in which it seeks relief of judicial foreclosure and sale of the property.
Appellants' arguments fail given the tenancy-at-sufferance clause contained in the deed of trust. Although appellants arguably have shown that a title dispute exists, they have not demonstrated that the dispute is intertwined with the issue of immediate possession. The issue in forcible detainer suits is not whether a valid title could pass when a wrongful foreclosure sale occurs. The determination of wrongful foreclosure is independent of the county court at law's determination of immediate possession in forcible detainer suits. See Villalon, 176 S.W.3d at 71. Courts of appeals consistently have allowed forcible detainer actions to proceed based on a tenancy-at-sufferance clause in a deed of trust without regard to whether the party seeking possession complied with the terms of the deed of trust. See, e.g., Dormady, 61 S.W.3d at 557-58; Rice, 51 S.W.3d at 711-12. Challenges to the validity of the foreclosure sale do not deprive the justice court or county court at law of jurisdiction. Elwell v. Countrywide Home Loans, Inc., 267 S.W.3d 566, 569 (Tex. App.—Dallas 2008, pet. dism'd w.o.j.).
Appellee was not required to present evidence demonstrating the legitimacy of the foreclosure sale or the appellants' default. See Dormady, 61S.W.3d at 558. Rather, to prevail in a forcible detainer action, appellee must present sufficient evidence of ownership to demonstrate a superior right to immediate possession. See id. at 557. We hold appellee met its burden. We further conclude that the issue of title and possession are not inextricably intertwined, the county court at law did not err in denying appellants' plea to the jurisdiction, and the county court at law appropriately retained the forcible detainer action.
We overrule appellants' first issue.
B. The county court at law did not abuse its discretion in denying appellants' motion to abate.
As part of their first issue, Appellants also argue that the county court erred in denying their motion to abate the forcible detainer action until the title suit was resolved in district court. Appellants argue "the first-filed rule," asserting that it first-filed for relief in district court, the district court has "dominant jurisdiction," and the forcible detainer action should be abated. We review the court's decision on the motion to abate for abuse of discretion. Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 248 (Tex. 1988).
A plea in abatement "cannot be used to determine the merits of an action" but rather asserts facts outside the record that "prevent the suit from going forward until the problem can be cured." Shutter v. Wells Fargo Bank, 318 S.W.3d 467, 470 (Tex. App.—Dallas 2010, pet. dism'd w.o.j.). The defendant must identify an impediment to the suit as well as its cure, and ask the court to abate the suit until the impediment is corrected. Id.
Here, the county court at law did not abuse its discretion in denying appellants' motion to abate. It is well established that forcible detainer actions may be brought and prosecuted concurrently with suits to try title in district court. Rice, 51 S.W.3d at 709; see also Salaymeh, 264 S.W.3d at 436. Thus, we reject appellants' contention that the title dispute was an impediment to the continuation of the forcible detainer suit.
Moreover, a forcible detainer action is intended to be a "speedy, simple, and inexpensive means to regain possession of property." Salaymeh, 264 S.W.3d at 437. To have granted the motion to abate in this case "would ignore the long-established legislative scheme of parallel resolution of immediate possession and title issues." Rice, 51 S.W.3d at 711. Accordingly, the county court at law did not abuse its discretion by denying appellants' motion to abate.
We conclude this argument is without merit.
C. The county court at law did not abuse its discretion in denying appellants' Rule 12 motion to show authority.
In their second issue, appellants assert the county court at law erred by refusing to consider appellants' Rule 12 motion to show authority. In their motion, appellants contest "the authority of any representative appearing on behalf of Mufaddal to embark on such representation." Appellants argue that appellee's counsel does not have the requisite authority to appear on behalf of appellee.
Texas civil procedure rule 12 allows a party to argue before the trial court that the law suit is being prosecuted or defended without authority. Tex. R. Civ. P. 12. The challenged attorney must appear before the court and show his authority to act. Id. At the hearing on the motion, the burden of proof is on the challenged attorney to show sufficient authority to prosecute or defend the suit on behalf of his client, a party to the law suit. Id. If the challenged attorney fails to show authority, the trial court must refuse to permit the attorney to appear in the cause and must strike the pleadings if no other authorized person appears. Id. A trial should not be unnecessarily continued or delayed for a rule 12 hearing. Id. "The purpose of a Rule 12 motion is to protect parties from groundless suits and to permit dismissal of suits instituted without authority." Nicholas v. Envtl. Sys. (Int'l) Ltd., 499 S.W.3d 888, 895 (Tex. App.—Houston [14th Dist.] 2016, pet. denied). We review a trial court's ruling on a motion to show authority for an abuse of discretion. Id.
In this case, it does not appear the county court at law ruled on appellants' motion; thus, it was denied by operation of law. The county court, however, did not abuse its discretion in denying the motion. As an initial matter, the motion was not timely before the court. Rule 12 provides that notice of the motion shall be served at least ten days before the hearing on the motion. See Tex. R. Civ. P. 12. Here, the motion is file-stamped July 23, 2015. Trial commenced on July 24, 2015. Additionally, the motion lacks a certificate of conference. Further, in contradiction to Rule 12, the motion was not served on appellee's counsel of record; rather, the certificate of service reflects it was served on "Ranul Reddy" via email. See id. (the motion shall be served upon the challenged attorney).
Howard Walker appeared as appellee's attorney of record in both the justice court and the county court at law. The court record contains correspondence from Walker on behalf of his client, appellee.
In their sur-reply brief, appellee submits that Rahul Reddy is an agent who attended the justice court setting on behalf of appellee as a fact witness. The only attorney who appeared at the justice court or the county court at law was Howard Walker.
Additionally, appellants failed to raise the motion timely. Rule 12 requires that the motion be heard and determined before the parties have announced ready for trial; however, appellants waited until cross-examination of a witness to bring the motion to the court's attention. See Tex. R. Civ. P. 12 (emphasis added). Moreover, when appellants did raise the motion, it was used improperly as an attack on the authority of the testifying fact witness rather than as a challenge to the authority of appellee's counsel. See id (Rule 12 "Attorney to Show Authority"). Under these circumstances, we hold the county court at law did not abuse its discretion in denying appellants' motion to show authority.
We overrule appellants' second issue.
D. The county court at law had sufficient evidence of foreclosure.
In their third issue, appellants appear to attack the county court's judgment, alleging that the county court lacked sufficient proof that there was an actual foreclosure and that appellees own title to the property. Appellants again cite to pleadings in district court in which Nationstar Mortgage filed a counterclaim seeking writ of possession and title after foreclosure on the property. Next, appellants maintain that the notice of trustee's sale stated that foreclosure would occur on April 7, 2015; however the substitute trustee's deed shows that the foreclosure occurred on April 20, 2015.
The test for legal sufficiency is "whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review." City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). When examining a legal sufficiency challenge, we review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it. Id. We credit favorable evidence if reasonable jurors could and disregard contrary evidence unless reasonable jurors could not. Id. So long as the evidence falls within the zone of reasonable disagreement, we may not substitute our judgment for that of the fact-finder. Id. at 822.
Here, as set forth, supra, the county court conducted a bench trial and found appellants committed a forcible detainer of the property. The evidence admitted at trial, without objection by appellants, was sufficient to establish appellee's right to immediate possession of the property. See Williams v. Bank of NY Mellon, 315 S.W.3d 925, 927 (Tex. App.—Dallas 2010, no pet.) (holding that purchaser of foreclosed property carried its burden of proof to superior right to possession of the property in forcible detainer action by submitting into evidence the deed of trust, the substitute trustee's deed, and proper notice to occupant of the property to vacate).
Additionally, "any potential error pertaining to [appellee's] rights to the property conveyed by the substitute deed would be an attack on the foreclosure process or [appellee's] title to the property. Olaoye v. Wells Fargo Bank, No. 02-11-00263, 2012 WL 2344846, at *2 (Tex. App.—Fort Worth June 21, 2012, no pet.) (mem. op.). "And any defects in the foreclosure process or the purchaser's title to the property may not be considered in a forcible detainer action." Id. (citing Shutter, 318 S.W.3d at 471). Such defects must be pursued, if at all, in a separate suit for wrongful foreclosure or to set aside the substitute deed. Id. Accordingly, the position upon which appellants rely is not material to any issue in this action. See id.
We overrule appellants' third issue.
III. Conclusion
Having overruled appellants' issues on appeal, we affirm the judgment of the county civil court at law.
/s/ John Donovan
Justice Panel consists of Justices Busby, Donovan, and Wise.