Opinion
NO. 12-20-00142-CV
08-26-2020
U.S. BANK NATIONAL ASSOCIATION, IN ITS CAPACITIES AS INDENTURE TRUSTEE AND COLLATERAL TRUSTEE, APPELLANT v. H & H PIPE & STEEL AND MADDUX BUILDING MATERIALS, INC., JOE LANE D/B/A HALLSVILLE WOODYARD, GOOD TIMES WOOD PRODUCTS, INC., TERRY DIFFEY D/B/A CHARTER TRUCKING, W.D. TOWNLEY AND SON LUMBER COMPANY, INC., D/B/A TOWNLEY LUMBER, WANNER ENTERPRISES, INC., D/B/A EWELL EQUIPMENT CO., DP SOLUTIONS, INC., AND PRIME ACRES MANAGEMENT, INC., APPELLEES
APPEAL FROM THE 217TH JUDICIAL DISTRICT COURT ANGELINA COUNTY , TEXAS ORDER
Appellant, U.S. Bank National Association, in its Capacities as Indenture Trustee and Collateral Trustee, filed a petition for permissive appeal with this Court. In the trial court, (1) the Bank filed a summary judgment motion on its first amended counterclaim, cross-claim, and third party claim, (2) Appellees Maddux Building Material, Inc. and H & H Pipe & Steel (the Maddux lien claimants) jointly filed a motion for summary judgment and a cross-motion, (3) Appellees/Cross-Appellants DP Solutions, Inc., Wanner Enterprises, Inc. d/b/a Ewell Equipment Co., Terry Diffey d/b/a Charter Trucking, Good Times Wood Products, Inc., Joe Lane d/b/a Hallsville Woodyard, and W.D. Townley and Son Lumber Company, Inc. d/b/a Townley Lumber (the DP Solutions lien claimants) jointly filed cross motions for summary judgment, and (4) Appellee/Cross-Appellant Prime Acres Management, Inc. joined in the cross motions filed by the DP Solutions lien claimants.
The trial court denied all motions and granted the Bank permission to appeal the following three issues:
Issue No. 1: Aspen Power took title to the subject property on the exact date and time as the deed of trust granted to U.S. Bank, as Trustee. Under these circumstances, the Trustee asserts that no judgment lien or mechanic's lien claimant, as a matter of law, could have priority over the first-filed deed of trust assigned to the Trustee under the bond documents, even if certain work commenced prior to the time the borrower acquired the property. The Court denied the Trustee's motion for summary judgment on this issue.(emphasis added). The trial court identified three "controlling questions of law" raised by the motions, whether (1) as a matter of law, no lien claimant could have priority over the deed of trust granted to the Bank, even assuming prior work was performed by third parties, when the deed of trust is filed and recorded at the same time and date that the borrower acquires the real property subject to the deed of trust; (2) the lien claimants' allegations of unclean hands and other equitable defenses, without additional supporting evidence, constitutes a genuine issue of material fact sufficient to prevent summary judgment in favor of the Bank; and (3) the loan documents at issue are ambiguous, and if so, whether the trial court must interpret their meaning on summary judgment when the opposing parties do not offer any extrinsic evidence with respect to an alleged ambiguity. The trial court also identified three substantive rulings on the questions of law: (1) the lien claimants' allegations that work was performed by third parties on the property prior to the time that the borrower acquired the property raise an issue of material fact sufficient to defeat the Bank's motion for summary judgment; (2) mere allegations of unclean hands and other defenses by the lien claimants in this case are sufficient to create a genuine issue of material fact for trial; and (3) the loan documents at issue are ambiguous, and the trial court is not required to interpret them even though no party has offered extrinsic evidence as to the meaning of the terms and provisions of the loan documents or the intent of the parties.
Issue No. 2: Angelina and Neches River Authority Industrial Development Corporation issued $53,330,000 in bond and loaned the proceeds from issuance of the bonds to Aspen Power to construct a power plant in Lufkin, Texas. The Authority assigned its rights, liens and interests under the loan documents to U.S. Bank, as Trustee, to secure repayment of the bonds issued to bondholders. Various lien claimants [parties objecting to the Bank's summary judgment motion] have made allegations of unclean hands and other defenses relating to the creation of and enforcement of the rights, liens, and interests granted to the Trustee, including rights to a certain ITC grant relating to construction of the power plant. The Trustee asserts that these allegations, unsupported by any summary judgment evidence, fail to raise genuine issues of material fact for trial and that it is entitled to judgment as a law.
Notwithstanding the allegations of unclean hands by Lien Claimants, by order dated September 29, 2016, the Court found that the Trustee was entitled to judgment in an amount up to $88,428,563 through November 1, 2016. By order dated September 29, 2016, the Court further directed that $3,432,224.28 of the sale proceeds be paid to the Trustee to reimburse the Trustee for payment of tax liens filed against the mortgaged properties. Otherwise, the Court has denied the Trustee's motions for summary judgment on this issue.
Issue No. 3: The loan documents assigned to the Trustee allow for "Permitted Liens." Certain of the Lien Claimants assert that all mechanics' liens and judgment liens against the mortgaged property are "Permitted Liens" under the loan documents and, accordingly, have priority over the mortgage lien granted to the Trustee. The Trustee asserts that the loan documents are unambiguous, and that the Lien Claimants' interpretation of the loan documents is illogical, unreasonable, not supported by any extrinsic evidence, and renders other provisions of the loan documents meaningless. The Trustee further asserts that, absent extrinsic evidence, the Court must interpret the loan documents to give meaning to all terms of the provisions and agreements. The Court denied the parties' motions for summary judgment on this issue.
After the Bank filed its petition for permissive appeal with this Court, the DP Solutions lien claimants filed a response and a cross-motion for permissive appeal, which presented two cross-issues: (1) "Is the Angelina Fuels' deed of trust legally defective for lack [of] consideration, therefore the Trustee is not entitled to any lien interest against the sale proceeds of Angelina Fuels;" and (2) "Is the property description in [] Angelina Fuels' deed of trust legally insufficient to convey an interest in the Angelina Fuels real property because the deed of trust failed to describe the 'subject property' with sufficient particularity to identify the property." Prime Acres adopted this cross-petition. The Bank responded that the lien claimants could not pursue a permissive appeal on the two cross-issues because they did not request and receive permission from the trial court to do so.
On July 31, 2020, this Court ordered the parties to submit additional briefing as to the following: (1) given the two issues identified in the cross-petitions, whether addressing the three issues in which the Bank seeks an interlocutory appeal will materially advance the ultimate termination of the litigation; (2) whether the two issues identified in the cross-petitions involve a controlling question of law as to which there is a substantial ground for difference of opinion and an immediate appeal may materially advance the ultimate termination of the litigation; and (3) whether the appeal should be abated to allow the parties to seek an amended order to include permission to appeal the two issues identified in the cross-petitions.
The parties filed supplemental briefing pursuant to this Court's order. US Bank posits that the cross-issues are moot, having been previously rejected by the trial court, and would fail on their merits, thus the appeal should proceed on the three original issues it raised. The Maddux lien claimants assert that only the trial court's first substantive ruling on the questions of law applies to them and merely identifies a fact issue. They argue that this Court has no jurisdiction in the matter. The DP Solutions lien claimants assert that the trial court's order fails to state the reasons why the trial court denied summary judgment, thereby depriving this Court of jurisdiction. They also maintain that the issues in the trial court order and the Bank's petition do not meet the standard for permissive appeal. Alternatively, they argue that this Court should abate the case to allow them to seek an amended order that includes the two cross-issues. Prime Acres adopts this brief.
In a civil action, the trial court may, by written order, permit an appeal from an order that is not otherwise appealable if: (1) the order to be appealed involves a controlling question of law as to which there is a substantial ground for difference of opinion; and (2) an immediate appeal from the order may materially advance the ultimate termination of the litigation. TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(d) (West Supp. 2019); see TEX. R. CIV. P. 168 ("permission must identify the controlling question of law as to which there is a substantial ground for difference of opinion, and must state why an immediate appeal may materially advance the ultimate termination of the litigation"). To invoke an appellate court's permissive-appeal jurisdiction, the "trial court must make a substantive ruling on the controlling legal issue being appealed so that the legal issue presented to this court is the same legal issue determined by the trial court." Eagle Gun Range , Inc. v. Bancalari , 495 S.W.3d 887, 889 (Tex. App.—Fort Worth 2016, no pet.). It matters not that the trial court "attempts to identify the controlling issue if the order does not show that the trial court made a substantive ruling on that controlling question of law." Id. The trial court's order "cannot involve a controlling question of law until the trial court itself has made a substantive ruling on the controlling legal issue in the order." Id.
As set forth above, the trial court expressly identified three controlling issues and made a substantive ruling on each one. Thus, our review of the order before us does not reveal a situation in which the trial court denied summary judgment without any explanation or improperly submitted the issues to this Court to decide. See id . (dismissing permissive appeal for want of jurisdiction; order contained no substantive ruling on any of the legal issues appellate court was asked to decide); see also De La Torre v . AAG Prop., Inc., No. 14-15-00874-CV, 2015 WL 9308881, at *2 (Tex. App.—Houston [14th Dist.] Dec. 22, 2015, no pet.) (mem. op.) (dismissing permissive appeal; record failed to show that trial court ruled on substantive controlling issues of law that it identified...instead, trial court submitted issues to appellate court to decide, which is not a proper use of permissive interlocutory appeal procedure); Great Am. E&S Ins. Co. v. Lapolla Indus., Inc., No. 01-14-00372-CV, 2014 WL 2895770, at *2 (Tex. App.—Houston [1st Dist.] June 24, 2014, no pet.) (mem. op.) (dismissing permissive appeal for want of jurisdiction; "trial court did not substantively rule on the controlling legal issue presented in this permissive appeal...in its amended order, the trial court denied appellant's motion for summary judgment without explanation"); Borowski v. Ayers , 432 S.W.3d 344, 347-48 (Tex. App.—Waco 2013, no pet.) (dismissing permissive appeal for want of jurisdiction; trial court presented two controlling questions of law but gave no substantive rulings on either). Moreover, a plain reading of the two proposed cross-issues in combination with the Bank's three issues appears to demonstrate that they are interrelated.
We likewise reject the DP Solutions lien claimants' argument that the trial court's order is defective because it "references multiple issues and does not identify a controlling question of law." See Armour Pipe Line Co . v. Sandel Energy , Inc., No. 14-16-00010-CV, 2016 WL 514229, at *4 (Tex. App.—Houston [14th Dist.] Feb. 9, 2016, no pet.) (mem. op.) ("[t]he statute and rules use the singular, 'a controlling question of law', which arguably reflects an intent to restrict permissive appeals to interlocutory judgments that involve one controlling question of law... Rule 168's purpose—to provide a means for expedited appellate disposition of focused and potentially dispositive legal questions—is not served if this procedure is used to obtain piecemeal appellate review of ordinary interlocutory summary judgment orders"). The Texas Supreme Court has expressly stated, "When courts of appeals accept such permissive appeals, parties and the courts can be spared the inevitable inefficiencies of the final judgment rule in favor of early, efficient resolution of controlling, uncertain issues of law that are important to the outcome of the litigation." Sabre Travel Int'l , Ltd. v. Deutsche Lufthansa AG , 567 S.W.3d 725, 732 (Tex. 2019) (emphasis added). The Supreme Court further noted that if all appellate courts exercised their discretion to deny permissive interlocutory appeals certified under Section 51.014(d), "the legislative intent favoring early, efficient resolution of determinative legal issues in such cases would be thwarted." Id. (emphasis added). "[I]n many instances, courts of appeals should do exactly what the Legislature has authorized them to do—accept permissive interlocutory appeals and address the merits of the legal issues certified." Id. at 733. (emphasis added). We simply cannot conclude that permissive appeals are limited to a single controlling issue of law.
Accordingly,
It is ORDERED that this appeal is abated and remanded to the trial court for a hearing, in which all parties participate, to determine whether (1) each of the two cross-issues (set forth above) (a) involve a controlling question of law as to which there is a substantial ground for difference of opinion; and (b) an immediate appeal from the order may materially advance the ultimate termination of the litigation; and (2) the trial court should sign an amended order on motions for summary judgment and granting permission for an interlocutory appeal.
It is FURTHER ORDERED that any amended order must include a substantive ruling or rulings on the controlling legal issue or issues being appealed.
It is FURTHER ORDERED that a reporter's record of the hearing must be certified to this Court on or before September 25, 2020.
It is FURTHER ORDERED that a clerk's record including any amended order must be certified to this Court on or before September 25, 2020.
GIVEN UNDER MY HAND AND SEAL OF SAID COURT, at my office this the 26th day of August 2020, A.D.
/s/_________
KATRINA MCCLENNY, CLERK