Opinion
No. 05-17-00255-CV
05-31-2018
JAMES B. OSTBERG, Appellant v. BANK OF AMERICA, N.A., U.S. BANK TRUST, N.A. AS TRUSTEE FOR LSF9 MASTER PARTICIPATION TRUST, CALIBER HOME LOANS INC., AND COUNTRYWIDE HOME LOANS INC., Appellees
On Appeal from the 95th Judicial District Court Dallas County, Texas
Trial Court Cause No. DC-15-04978
MEMORANDUM OPINION
Before Justices Evans, Whitehill, and Schenck
Opinion by Justice Whitehill
Appellant James B. Ostberg bought a house subject to a deed of trust in favor of "America's Wholesale Lender." Several years later he sued appellees, alleging that he had been defrauded because America's Wholesale Lender was not an existing entity. Appellees sought summary judgment on several grounds, and the trial court granted their motions.
The pivotal question on appeal is whether appellees proved as a matter of law that America's Wholesale Lender was an existing entity. We conclude that they did and accordingly affirm.
I. BACKGROUND
A. Facts
The summary judgment evidence showed the following facts:
In January 2003, appellee Countrywide Home Loans, Inc. filed an assumed name certificate with the Texas Secretary of State. The certificate stated that Countrywide was incorporated, organized, or associated under the laws of New York and that it would be conducting business under the assumed name "America's Wholesale Lender." The certificate further stated that Countywide would use the assumed name from February 1, 2003, through February 1, 2013.
In 2005, Ostberg signed a note promising to pay America's Wholesale Lender $152,000. The note was secured by a deed of trust in favor of America's Wholesale Lender. Specifically, the deed of trust recited, "'Lender' is AMERICA'S WHOLESALE LENDER[.] Lender is a CORPORATION organized and existing under the laws of NEW YORK." The deed of trust encumbered Ostberg's property in Garland, Texas.
In 2007, Countrywide filed a new assumed name certificate with the Texas Secretary of State. It contained statements similar to those in the 2003 assumed name certificate.
In 2012, the deed of trust was assigned to appellee Bank of America, N.A.
In February 2014, Bank of America sent Ostberg a notice of default and intent to accelerate reciting that he was almost $21,000 behind in his mortgage payments.
In November 2014, the note and deed of trust were assigned to LSF9 Mortgage Holdings, LLC.
In February 2015, the note and deed of trust were assigned to appellee U.S. Bank Trust, N.A., as trustee for LSF9 Master Participation Trust.
In April 2015, Ostberg was sent a notice of acceleration and a notice of a non-judicial foreclosure sale regarding the note and deed of trust.
B. Procedural History
Ostberg sued appellees Bank of America, U.S. Bank Trust, and Caliber Home Loans, Inc. (Ostberg's mortgage servicer, according to the foreclosure sale notice), and he obtained a temporary restraining order to block the foreclosure sale.
Ostberg later filed an amended petition that remained his live pleading for the rest of the case. The amended petition added appellee Countrywide Home Loans, Inc. as a defendant, and it asserted claims for (i) quiet title, (ii) fraud, and (iii) attorney's fees under the declaratory judgments act. The claims were predicated on allegations that America's Wholesale Lender was a "non-existent entity" when he executed the deed of trust.
Ostberg also asserted a claim for money had and received, but he abandoned that claim during the summary judgment proceedings.
U.S. Bank Trust and Caliber jointly filed a summary judgment motion asserting several grounds. One ground was that the evidence showed that America's Wholesale Lender existed when the note and deed of trust were executed because that was Countrywide's assumed name. Ostberg responded. The trial court granted the summary judgment motion and dismissed Ostberg's claims against U.S. Bank Trust and Caliber.
Bank of America filed a summary judgment motion. Then it filed an amended summary judgment motion raising the same grounds as U.S. Bank Trust and Caliber's motion. Countrywide joined in that amended motion. Ostberg responded to the amended motion. The trial court signed an order granting the amended summary judgment motion and ordering Ostberg take nothing from Bank of America and Countrywide. This order was the final judgment in the case.
Ostberg timely appealed.
II. ANALYSIS
A. Issues Presented
Ostberg presents five issues attacking the various summary judgment grounds raised in the trial court. We need discuss only his first issue, which asserts that the trial court erred by determining that "America's Wholesale Lender" was not a nonexistent entity.
B. Standard of Review
We review an order granting summary judgment de novo. Durham v. Children's Med. Ctr. of Dallas, 488 S.W.3d 485, 489 (Tex. App.—Dallas 2016, pet. denied).
When we review a traditional summary judgment for a defendant, we determine whether the defendant conclusively disproved an element of the plaintiff's claim or conclusively proved every element of an affirmative defense. We take evidence favorable to the nonmovant as true, and we indulge every reasonable inference and resolve every doubt in the nonmovant's favor. A matter is conclusively established if ordinary minds could not differ as to the conclusion to be drawn from the evidence. Id.
C. Issue One: Did appellees conclusively prove that the deed of trust was made in favor of an existing entity?
Ostberg argues that the deed of trust is void and fraudulent because the listed lender, America's Wholesale Lender, did not exist at the time of execution. He further argues that under Texas law a deed of trust in favor of a nonexistent entity is void. See Kimberly Dev. Corp. v. First State Bank of Greens Bayou, 404 S.W.2d 631, 637-38 (Tex. Civ. App.—Houston 1966, writ ref'd n.r.e.) (foreclosure sale pursuant to deed of trust in favor of nonexistent entity was invalid).
To support his contention that America's Wholesale Lender did not exist in 2005, Ostberg filed a New York certificate of incorporation showing that in 2008 one Dennis L. Bell of Paducah, Kentucky, incorporated "America's Wholesale Lender, Inc." in New York. Yet, Ostberg's 2005 deed of trust identifies "AMERICA'S WHOLESALE LENDER" as "Lender," and it further says that "Lender is a CORPORATION organized and existing under the laws of NEW YORK." From this evidence he infers that "America's Wholesale Lender" did not actually exist in 2005 when he executed the deed of trust.
Bell and America's Wholesale Lender, Inc. eventually got sued for trademark infringement. See Countrywide Home Loans, Inc. v. America's Wholesale Lender, Inc., No. SACV 12-00242-CJC(ANx), 2013 WL 12131378 (C.D. Cal. Dec. 13, 2013).
Debtors have unsuccessfully made similar arguments in other jurisdictions. See, e.g., Belda v. Bank of Am., N.A., No. CV 15-7634 FMO, 2015 WL 12860495, at *2 (C.D. Cal. Nov. 4, 2015) ("According to plaintiff, the DOT is void and of no effect because America'[s] Wholesale Lender did not exist at the time it was executed . . . .") (internal quotations omitted); Paulding v. New Penn Fin., LLC, No. 17-11340-FDS, 2018 WL 379019, at *1 (D. Mass. Jan. 11, 2018) (plaintiff alleged that "America's Wholesale Lending [sic] was a non-existent, fictitious legal entity that was never incorporated anywhere in the United States") (emphasis omitted); Sparks v. The Bank of N.Y. Mellon, No. H-14-813, 2015 WL 4093944, at *2 (S.D. Tex. July 7, 2015) (debtor argued in opposition to summary judgment motion that note was void because payee America's Wholesale Lender "never existed"); Kagen v. Countrywide Home Loans, Inc., No. D069579, 2016 WL 4939307, at *1 (Cal. Ct. App. Sept. 16, 2016).
Despite drawing all reasonable inferences from the evidence in Ostberg's favor, we do not agree that the evidence raises an inference that the entity named in the 2005 deed of trust did not exist at the time. Rather, the evidence conclusively establishes the following facts:
• In 2003, Countrywide Home Loans, Inc., a New York corporation, filed with the Texas Secretary of State an assumed name certificate allowing it to conduct business under the assumed name America's Wholesale Lender for the next ten years.
• In 2005, Ostberg executed a note and a deed of trust in favor of America's Wholesale Lender. The deed of trust says, "'Lender' is AMERICA'S WHOLESALE LENDER[.] Lender is a CORPORATION organized and existing under the laws of NEW YORK."
• The deed of trust concerned property in Garland, Texas, and Ostberg's signature on it was notarized in Dallas County, Texas.
In sum, the evidence shows that New York corporation Countrywide Home Loans, Inc., existed in 2005 and was entitled to use the name America's Wholesale Lender when it transacted business in Texas. See TEX. BUS. ORGS. CODE § 5.051 ("[A] foreign entity having authority to transact business in this state may transact business under an assumed name by filing an assumed name certificate in accordance with Chapter 71, Business & Commerce Code."). When Ostberg executed the deed of trust stating that the lender was America's Wholesale Lender, "America's Wholesale Lender" unequivocally referred to Countrywide Homes Loans, Inc., an existing New York corporation. Thus, the deed of trust (i) was made in favor of an existing entity, using a name that the entity was entitled to use, and (ii) accurately stated that "Lender" was a corporation organized and existing under the laws of New York.
The fact that Bell later incorporated a business called America's Wholesale Lender, Inc. does not invalidate the deed of trust Ostberg executed three years earlier. See Saddle Blanket 1316 Land Trust v. The Bank of N.Y. Mellon, No. 4:15-CV-401-A, 2015 WL 7736239, at *2 (N.D. Tex. Nov. 30, 2015) ("The fact that a business using the name 'America's Wholesale Lender' was later incorporated has no bearing on the validity of the documents executed by Moates.").
Ostberg's authorities do not support a contrary result. In Kimberly Development Corporation, the deed of trust was supposed to list First State Trust Corporation as the trustee. 404 S.W.2d at 635. Instead, First State Corporation was named as trustee by mistake. Id. There was no corporate entity with that name, so the court of civil appeals held that a foreclosure sale conducted by First State Trust Corporation was invalid. Id. at 635, 636. In this case, by contrast, Countrywide existed, was a New York corporation, and was entitled to use the lender's name listed in the deed of trust.
Ostberg also relies on America's Wholesale Lender v. Pagano, 866 A.2d 698 (Conn. App. Ct. 2005). In that case, Countrywide Home Loans, Inc. filed suit under its "trade name" America's Home Lender seeking to foreclose on a property. Id. at 699. The Connecticut appellate court held that under Connecticut law a suit brought solely under a trade name does not confer jurisdiction on the court. Id. at 700. Accordingly, the court reversed summary judgment against the defendant and remanded for dismissal of the complaint. Id. at 702. Pagano concerns a point of Connecticut procedure that is contrary to Texas procedure. See TEX. R. CIV. P. 28 ("Any partnership, unincorporated association, private corporation, or individual doing business under an assumed name may sue or be sued in its partnership, assumed or common name for the purpose of enforcing for or against it a substantive right, but on a motion by any party or on the court's own motion the true name may be substituted."). Pagano does not address the issue before us, which is whether under Texas law the evidence conclusively establishes that the lender identified in Ostberg's deed of trust was an existing entity at the time of execution.
We overrule Ostberg's first issue.
We do not in this opinion address what the result would be had Countrywide not filed a Texas assumed name certificate.
D. Conclusion
Appellees' summary judgment motions argued that their proof that America's Wholesale Lender was an existing entity warranted summary judgment as to all of Ostberg's claims. Ostberg does not argue that any of his claims can survive if his first issue fails. We conclude that our overruling Ostberg's first issue suffices to compel affirmance, so we do not address his remaining issues. See TEX. R. APP. P. 47.1.
III. DISPOSITION
We affirm the trial court's judgment.
/Bill Whitehill/
BILL WHITEHILL
JUSTICE 170255F.P05
JUDGMENT
On Appeal from the 95th Judicial District Court, Dallas County, Texas
Trial Court Cause No. DC-15-04978.
Opinion delivered by Justice Whitehill. Justices Evans and Schenck participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellees Bank of America, N.A., U.S. Bank Trust, N.A. as Trustee for LSF9 Master Participation Trust, Caliber Home Loans Inc., and Countrywide Home Loans Inc. recover their costs of this appeal from appellant James B. Ostberg. Judgment entered May 31, 2018.