Opinion
No. 07-20-00038-CV
08-26-2020
TFHSP LLC, SERIES 4531, APPELLANT v. WELLS FARGO BANK, N.A., AS TRUSTEE ON BEHALF OF THE REGISTERED HOLDERS OF FIRST FRANKLIN MORTGAGE LOAN TRUST 2004-FF46, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2004-FF46, APPELLEE
On Appeal from the 462nd District Court of Denton County, Texas
Trial Court No. 17-4726-367 , Honorable Lee Ann Breading, Presiding
MEMORANDUM OPINION
Before QUINN, C.J., and PIRTLE and DOSS, JJ.
TFHSP LLC, Series 4531 appeals from the trial court granting summary judgment in favor of Wells Fargo Bank, N.A., as Trustee on Behalf of the Registered Holders of First Franklin Mortgage Loan Trust 2004-FF46, Mortgage Pass-Through Certificates, Series 2004-FF46 (Wells), and denying its own summary judgment on its counter-claims. Four issues pend for review. We address each in turn and affirm.
Because this appeal was transferred from the Second Court of Appeals, we are obligated to apply its precedent when available in the event of a conflict between the precedents of that court and this Court. See TEX. R. APP. P. 41.3.
Background
On February 13, 2004, Lourdes Corey and Mark Brad Corey (the Coreys) purchased a home located in Denton County. To effectuate the transaction, they executed an Adjustable Rate Note in the principal amount of $186,450.00 payable to First Franklin Financial Corporation as well as a Deed of Trust to secure payment. Both instruments were duly recorded in the county's real property records. Wells came to hold the note secured by the deed of trust.
The Coreys' home was situated within an area covered by the Frisco Heritage Green Residential Association (Heritage). In time, the Coreys failed to pay dues/fees assessed by Heritage on the realty, which resulted in Heritage foreclosing upon its ensuing lien on March 1, 2011. Heritage bought the property at the foreclosure sale and, on December 12, 2013, sold it to TFHSP for $4,100.00.
Apparently, a dispute arose between Wells and TFHSP wherein the latter claimed to own the property free of the deed of trust executed by the Coreys. That led Wells to sue for declaratory relief requesting that the trial court declare its interest in the property to be superior to that of TFHSP's. However, in the style of its petition, it inaccurately referred to the trust certificate involved. That is, it described the certificate as Series 2004-FF6, instead of Series 2004-FF46. The mistake was discovered when the trial court denied Wells's first motion for summary judgment. Thereafter, Wells amended its petition to correct the mistake, added a claim to quiet title, and again moved for a traditional summary judgment. The trial court also had before it the summary judgment motion of TFHSP to quiet title. The motion of Wells was granted while that of TFHSP was denied.
Issue One - Statute of Limitations
In its first issue, TFHSP contends that "WELLS was not entitled to summary judgement [and it was] because it failed to conduct a nonjudicial foreclosure or to seek judicial foreclosure within the applicable statute of limitations." That is, "[w]hen the holder of a mortgage accelerates its note, a four-year limitations period begins and the holder must pursue foreclosure within said period." That was not done here, according to TFHSP. We overrule the issue.
The bank's underlying suit was one for declaratory relief and to quiet title, not one for foreclosure. In the petition, it sought to have the trial court declare its lien superior to that of TFHSP's and, thereby, subject it to extinguishment if it ever foreclosed. So, Wells having not opted to seek foreclosure renders TFHSP's limitation argument inapposite.
Issue Two - The Deed of Trust is Void Ab Initio
Next, TFHSP questions the validity of the decision denying its motion for summary judgment and granting that of Wells because TFHSP allegedly proved the deed of trust and note executed by the Coreys were void. They were purportedly void because both instruments were executed in favor of First Franklin Financial Corp., a subsidiary of National City Bank of Indiana and neither entity supposedly existed at the time. And, proof that neither existed derived from its search of the webpage maintained by the Texas Secretary of State. Allegedly, the search revealed that an entity named First Franklin Financial Corporation had its charter forfeited in 1995 and fell prey to a tax forfeiture in 2000. So too did the search fail to uncover an entity named National City Bank of Indiana being permitted or registered to operate in Texas. Consequently, TFHSP believed it proved as a matter of law that neither existed. We overrule the issue.
The initial flaw encountered is TFHSP's disregard for the rather long-standing rule that a parent and subsidiary corporation are two different entities. Cadena Comercial USA Corp. v. Tex. Alcoholic Bev. Comm'n, 518 S.W.3d 318, 332 (Tex. 2017) (noting the distinction). So, allegedly failing to uncover evidence of National City Bank of Indiana's existence or authority to operate in Texas does not mean its subsidiary, First Franklin, did not exist or could not operate. And, since the instruments in question were executed in favor of First Franklin, its existence and ability to operate would be the truly incremental component of TFHSP's argument.
Another flaw underlying the proposition is TFHSP's assumption that the entity or entities that underwent charter forfeiture in 1995 and 2000 was or were the same entity named in the promissory note and deed executed by the Coreys. We are not directed to anything of record establishing that. Without such evidence, we are left to speculate about the accuracy of TFHSP's assumption; yet, neither speculation nor conjecture are legitimate basis for a summary judgment. See Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727 (Tex. 2003) (stating that a finding of cause in fact may be based on either direct or circumstantial evidence but cannot be supported by mere conjecture, guess, or speculation).
Finally, the aforementioned note and deed were executed in 2004. Given this, TFHSP's argument implicitly invites us to infer that non-existence in 1995 or 2000 proves non-existence in 2004. Such, though, is not logically sound analysis. Much can happen within those intervening four to nine years. Entities or beings that may not have existed last year may exist today. To ignore that truism would be unreasonable. And, that truism logically precludes us from holding that simply because some entity named First Franklin Financial Corporation lost its charter or underwent a tax forfeiture years earlier, an entity with a like name must not have been in existence in 2004.
Issue Three - Amended Pleadings
TFHSP next contends that Wells "made an improper attempt to substitute parties without filing a motion to substitute parties, as is required by the Texas Rules of Civil Procedure." In doing so, according to TFHSP, the trial court granted relief to a party not before the court. What the bank was obligated to do, in its estimation, was secure leave of the court to substitute parties, which it did not. Thus, the amended pleading which Wells filed allegedly had to be struck. We overrule the issue.
As alluded to earlier, Wells initiated the underlying suit by designating the plaintiff as Wells Fargo as Trustee, Series "2004-FF6." The holder of the instrument was actually Wells as Trustee Series "2004-FF46." To correct this, it amended its petition to refer to the trust series "FF46." In its amended petition, the bank also included the following footnote: "Plaintiff's First Amended Petition reflects the properly named party which was incorrectly named in Plaintiff's Original Petition." A plaintiff misnaming itself is a misnomer. Chen v. Breckenridge Estates Homeowners Ass'n, 227 S.W.3d 419, 420-21 (Tex. App.—Dallas 2007, no pet.); accord In re Greater Houston Orthopaedic Specialists, Inc., 295 S.W.3d 323, 325 (Tex. 2009) (stating that a misnomer occurs when a party misnames itself or another party and the correct parties are otherwise involved). Additionally, a misnomer may be corrected through an amended pleading. Texas A & M Univ. v. Ybarra, 663 S.W.2d 80, 81 (Tex. App.—Houston [14th Dist.] 1983, no writ). Here, Wells misnamed itself in its original petition and amended the pleading to correct that mistake. Its amendment occured long before seven days of the summary judgment hearing and, consequently, required no approval from the trial court. See TEX. R. CIV. P. 63 (stating that parties may amend their pleadings as they may desire at such time as not to operate as a surprise to the opposing party, but if done within seven days of trial, they shall be filed only after leave of the court is obtained); see Triex Tex. Holdings, LLC v. Marcus & Millichap Real Estate Inv. Servs. of Nev., No. 07-18-00077-CV, 2019 Tex. App. LEXIS 3365, at *5 (Tex. App.—Amarillo Apr. 25, 2019, no pet.) (mem. op.) (stating that 1) parties may freely amend their pleadings, 2) parties must obtain leave from the trial court to do so within seven days of trial, which includes a summary judgment hearing, and 3) leave to amend must be granted unless amendment operates as a surprise to the opposing party). TFHSP does not suggest that the amendment caused surprise. So, we cannot say the trial court erred in allowing the correction through amendment to stand.
We note appellant's argument that FF6 and FF46 were two "distinctly separate legal entit[ies]." Yet, TFHSP did not cite us to anything of record purporting to support its conclusion.
Issue Four - Trial Court Lacked Subject-Matter Jurisdiction
TFHSP finally argues that the misnomer deprived the trial court of subject-matter jurisdiction. Authority holds otherwise. When the correct party sues under the incorrect name, the trial court nonetheless acquires jurisdiction after service with the misnomer if it is clear that no one was misled or disadvantaged. Reddy P'ship/5900 N. Freeway, L.P. v. Harris Cty Appr. Dist., 370 S.W.3d 373, 377 (Tex. 2012). There being a misnomer, service on TFHSP, and the lack of any allegation about anyone being misled or disadvantaged, the trial court acquired jurisdiction over the cause.
Accordingly, we affirm the trial court's judgment.
Brian Quinn
Chief Justice