Adams v. First Nat. Bank of Bells/Savoy

• Decision Date: 25 January 2005
• Docket Number: No. 05-03-00509-CV.,05-03-00509-CV.
• Citation: 154 S.W.3d 859
• Parties: Kaye ADAMS, Appellant, v. FIRST NATIONAL BANK OF BELLS/SAVOY and Shirley Mullinix, Appellees.
• Court: Texas Court of Appeals

154 S.W.3d 859

Kaye ADAMS, Appellant, v. FIRST NATIONAL BANK OF BELLS/SAVOY and Shirley Mullinix, Appellees.

No. 05-03-00509-CV.

Court of Appeals of Texas, Dallas.

January 25, 2005.

Robert W. Minshew, James Morris, Kennedy & Minshew, P.C., Sherman, for Appellant.

Richard Abernathy, Charles E. Crawford, Abernathy Roeder Robertson & Joplin, McKinney, for Appellees.

Before Justices MORRIS, FRANCIS, and LANG-MIERS.

OPINION NUNC PRO TUNC

Opinion by Justice LANG-MIERS.

On the court's own motion, we issue this nunc pro tunc opinion to correct a clerical error in our January 18, 2005 opinion. We vacate our previous opinion. This is now the opinion of the court.

This case involves foreclosure on property located in Sherman, Texas based on a due-on-sale clause. Kaye Adams¹ appeals the summary judgment rendered against her in favor of First National Bank of Bells/Savoy (the Bank) and its president, Shirley Mullinix. Adams raises nine issues on appeal generally complaining that the trial court should not have (1) denied her motion for partial summary judgment, (2) granted summary judgment dismissing her wrongful foreclosure claim, (3) granted summary judgment dismissing her request for declaratory relief, (4) granted summary judgment dismissing her breach of contract claim, or (5) denied her special exception to the Bank's first motion for summary judgment. We affirm the trial court's judgment. Tex.R.App. P. 43.2(a).

I. BACKGROUND

On May 14, 1998, Adams obtained a $560,000 personal loan to finance her plans to renovate a building she owned in downtown Sherman. Adams gave the Bank deed of trust liens against the property to be renovated and against an adjacent property that was subject to a superior lien. On June 24, 1999, she obtained a second personal loan from the Bank for $31,000. To secure the $31,000 loan, Adams gave the Bank a second deed of trust lien against the property to be renovated and a third deed of trust lien against the adjacent property.

Adams was also the sole shareholder, officer, and director of Adams First Financial, Inc., which was an approved lender for residential loans with the Federal National Mortgage Association (Fannie Mae) and other similar organizations. To satisfy Fannie Mae's questions about Adams First Financial's net worth, Adams' accountant recommended that she transfer the deed for the property to the corporation. In a letter dated July 24, 1998, Adams told Fannie Mae that she had transferred ownership of the property to Adams First Financial and that she would send it a copy of the deed. Adams later signed a warranty deed dated December 1, 1998, transferring ownership of the property to Adams First Financial. She placed the warranty deed in a drawer and never recorded it. Adams did not obtain the Bank's consent to the transfer.

In September of 1999, Adams stopped renovating the property and put it on the market with an asking price of $2.8 million. But Adams did not receive any offers to buy the property and was unable to find a business partner.

In May or June of 2000, the Bank became aware that the property was listed as an asset on both Adams' personal financial statement and Adams First Financial's corporate financial statement. The president of the Bank, Shirley Mullinix, called Adams and asked if she had transferred title to the property. Adams told her that she had.²

The Bank notified Adams in a June 21, 2000, letter that she was in default because she had conveyed the property in violation of the loan agreements and failed to complete the remodeling of the property. The Bank did not give Adams notice of its intent to accelerate or an opportunity to cure. It accelerated the debt on both notes and demanded payment in full on both notes by July 7, 2000. The attached statement also notified Adams that if the amounts were not paid in full by July 7, 2000, the property would be posted for foreclosure on August 1, 2000.

Adams' attorney sent a letter to the Bank dated June 23, 2000, stating that the warranty deed transferring the property to Adams First Financial had not been recorded and had been rescinded, and that corrected financial statements would be prepared and sent to the Bank. On July 5, 2000, the Bank received two checks from Adams representing her regular monthly payments on the two notes. But the Bank returned the two checks on July 7, 2000, telling Adams that the loans had been accelerated and that the Bank would not accept the partial payments.

On July 31, 2000, the Bank told Adams that it was postponing the foreclosure until September 2000. It also asked Adams to provide the Bank with the following information by August 11, 2000:

1. Proof from Fannie Mae acknowledging that they are satisfied with the corporation's new audited Financial Statements, which do not contain this property. [sic]

2. New Financial Statements of the corporation;

3. A plan for completion of construction;

4. A reasonable plan for selling the property;

5. That an evaluation of the value of the property be obtained;

6. All payments of the Notes be brought current;

7. A plan to reduce the credit card debt on [Adams'] personal Financial Statement.

Meanwhile, Adams delivered amended financial statements for Adams First Financial to the Bank that no longer identified the property as a corporate asset. In response, the Bank sent a letter dated August 2, 2000, to Adams' attorney acknowledging receipt of the amended financial statement for Adams First Financial, and requesting clarification and substantiation of some of the figures that had been changed. Adams did not respond to the Bank's letters.

On August 14, 2000, the Notice of Trustee's Sale was posted in Grayson County. The Notice recited that "[b]ecause of a default in the provisions of the Deed of Trust, the Substitute Trustee will sell the property by public auction to the highest bidder for cash at the place and date specified to satisfy the debt secured by the Deed of Trust." On September 5, 2000, the Bank foreclosed on the property.

The foreclosure sale deeds recited "[d]efault has occurred in the payment of the Obligations [sic] when due." The foreclosure sale deeds also stated that "[w]ritten notice of default and of the opportunity to cure the default to avoid acceleration of the maturity of the Note was served on behalf of the Beneficiary by certified mail on each debtor...." In addition, the substitute trustee filed composite affidavits stating that "[o]n July 10, 2000, KAYE ADAMS was notified by certified mail that she had a period of not less than twenty days to cure the default before the entire debt secured by the Deed of Trust became due and notice of the proposed foreclosure sale was given."

On January 5, 2001, Adams sued the Bank for wrongful foreclosure, wrongful credit reporting or defamation, and unjust enrichment. In late January 2001, the substitute trustee filed corrected foreclosure sale deeds that stated that the Bank had requested the enforcement of the deeds of trust because a "[v]iolation of the terms and conditions of the Note and Deed of Trust has occurred." Also, the corrected foreclosure sale deeds and composite affidavits did not include language stating that Adams had been given notice and the opportunity to cure the default.

On February 5, 2002, Adams amended her petition to include a claim for intentional infliction of emotional distress and a request for declaratory judgment that the foreclosure was wrongful because the language reciting the reason for foreclosure in the foreclosure sale deeds was not correct.

The Bank and Mullinix filed their first motion for summary judgment seeking both a traditional and a no-evidence summary judgment dismissing all of Adams' claims. Adams responded by filing (1) a motion for partial summary judgment seeking a no-evidence summary judgment on the Bank's affirmative defenses and a traditional summary judgment on her claims for relief under the Uniform Declaratory Judgment Act; (2) a second amended petition alleging the additional causes of action of breach of contract, negligence, usury, common law fraud, and statutory fraud; and (3) a response to the Bank's and Mullinix's first motion for summary judgment, including a special exception to the Bank's no-evidence portion of its motion contending that it was based on the Bank's affirmative defense of "unclean hands." The trial court denied Adams' motion for partial summary judgment and granted the Bank's and Mullinix's first motion for summary judgment, except that it did not dismiss Adams' claim for wrongful credit reporting.

Before the trial court's decision on the first motion for summary judgment and in response to Adams' second amended petition, the Bank and Mullinix filed a second motion for summary judgment seeking dismissal of Adams' six additional causes of action. The trial court granted the second motion for summary judgment, except that it did not dismiss Adams' breach of contract claim. The Bank and Mullinix filed their third motion for summary judgment on Adams' two remaining claims for wrongful credit reporting and breach of contract. Adams responded by filing her third amended petition that added a claim for libel per se. The Bank and Mullinix filed an amended third motion for summary judgment that addressed Adams' additional claim. The trial court granted the Bank's motion in its entirety, disposing of all claims, and entered its Final Summary Judgment. None of the three partial summary judgments, the denial of Adams' motion for partial summary judgment, or the final summary judgment specify the trial court's basis for its rulings.

II. SUMMARY JUDGMENT

In her first through fourth and sixth through ninth issues on appeal, Adams appeals the trial court's summary judgment insofar as it granted the Bank's request for summary judgment dismissing her claims for wrongful foreclosure and breach of contract and denied her request for partial summary judgment seeking declaratory...