Blanco, Inc. v. Porras

• Decision Date: 04 April 1990
• Docket Number: No. 89-1376,89-1376
• Citation: 897 F.2d 788
• Parties: BLANCO, INC., Plaintiff-Appellee, v. I. David PORRAS, Individually, and 1st RepublicBank Dallas, N.A., Defendants-Appellants, and Federal Deposit Insurance Corporation, As Receiver of First RepublicBank Dallas, N.A. and NCNB Texas National Bank, Intervenors-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 788

897 F.2d 788

BLANCO, INC., Plaintiff-Appellee, v. I. David PORRAS, Individually, and 1st RepublicBank Dallas N.A., Defendants-Appellants and Federal Deposit Insurance Corporation, As Receiver of First RepublicBank Dallas, N.A. and NCNB Texas National Bank, Intervenors-Appellants.

No. 89-1376.

United States Court of Appeals Fifth Circuit.

April 4, 1990.

As Modified on Denial of Rehearing May 9, 1990.

Jack Pew, Jr., Jackson & Walker, Dallas, Tex., for 1st Republicbank Dallas, N.A., FDIC and NCNB Texas Nat. Bank.

J. Michael Cunningham, Davis W. Lindemood, Brockett, Cunningham & Bates, Midland, Tex., for I. David Porras.

Stephen I. Adler, Leslie Cain, Barron, Graham & Adler, Austin, Tex., for plaintiff-appellee.

Appeals from the United States District Court for the Western District of Texas.

Before WILLIAMS, SMITH, and DUHE, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

Today we are asked to decide whether plaintiff Blanco, Inc. ("Blanco"), has complied with Texas's statutory requirements for the creation of a mechanics' lien, and, if so, whether it therefore is entitled to a money judgment against a rival lienholder that previously had foreclosed upon the subject property and then purchased it at the foreclosure sale. Concluding that Blanco's lien is valid but that Texas law precludes monetary recovery against a purchaser of encumbered property that does not assume payment of any debts secured by it, we affirm in part and reverse and render in part.

I.

On October 12, 1981, Blanco contracted with defendant I. David Porras to clear trees and brush from 785 acres of Porras's 1,845-acre tract of land in Freestone County, Texas, at a price of $360/acre. ¹ Shortly thereafter, the parties modified their original agreement to provide that Blanco was to "finish clearing the entire 1,500 acres" and also entered into a separate oral contract whereby Blanco was to perform leveling and "dirt work" at a price of $100/bulldozer-hour.

On October 29, 1982, Blanco's president, Zane Blanton, filed an "affidavit for mechanics' and materialmen's lien" in the records of Freestone County. Blanton's affidavit stated that Blanco was owed $587,795 pursuant to a contract with Porras and therefore claimed a mechanics' lien on that part of Porras's land that it had improved by "clearing, leveling, and performing dirt work." It further described the property to be charged with the lien as

... fifteen hundred (1500) acres of land, being out of and a part of a 2350.427-acre tract of land ... in the County of Freestone, State of Texas.... [b]eing the same land conveyed to I. David Porras by Deed dated September 29, 1981, of record in Vol. 598, Pages 50 et seq. of the Deed Records of Freestone County, Texas....

Copies of Blanco's written contracts with Porras were attached to Blanton's affidavit and made a part thereof.

Also in October 1982, defendant First RepublicBank Dallas, N.A. ("Republic"), loaned Porras $10 million and secured that loan by obtaining a deed of trust on Porras's Freestone County land. Republic recorded its deed of trust on November 4, 1982, approximately one week after Blanco filed its mechanics' lien.

In 1986, Porras fell behind in his loan payments to Republic and in his contractual payments to Blanco. In response to Porras's default, Republic foreclosed on his land pursuant to its deed of trust and then purchased the property at the foreclosure sale.

Shortly thereafter, Blanco filed suit in Texas state court against Porras and Republic, seeking contractual damages and the right to foreclose on the property pursuant to its mechanics' lien. By agreement of the parties, the heavily fact-based contractual dispute between Blanco and Porras was tried to the jury, while the purely legal controversy between Blanco and Republic was submitted to the court.

After a lengthy trial, the jury found that Porras had breached his agreement with Blanco and assessed damages at $565,000. The court likewise found in Blanco's favor, concluding that Blanco's mechanics' lien complied with the applicable statutory requirements and, because it had been filed first, was superior to Republic's deed of trust as to the 1,500 acres that it purported to cover. Moreover, the court held that Republic was jointly and severally liable with Porras for the full amount of Blanco's contractual damages.

Republic promptly filed a motion for a new trial. While that motion was pending, Republic was declared insolvent by the Comptroller of the Currency. The Federal Deposit Insurance Corporation ("FDIC"), appointed as receiver, intervened in this action and removed it to federal district court, basing jurisdiction upon 12 U.S.C. Sec. 1819. NCNB Texas National Bank, N.A. ("NCNB"), was then named by the FDIC to act as the "bridge bank" to acquire a portion of the assets and liabilities of the failed Republic. ²

Following removal, the district court denied the Bank's motion for a new trial and, with minor modifications, adopted the state court's judgment as its own. ³ On appeal, Porras challenges only the validity of Blanco's mechanics' lien; the Bank also challenges its liability for money damages.

II.

We begin by addressing the two major challenges to the validity of Blanco's mechanics' lien raised by Porras and the Bank. In so doing, we are guided by the principle, well established in Texas law, that the mechanics' lien statutes are to be liberally construed in favor of protecting the interests of laborers and materialmen. See RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex.1985); First Nat'l Bank v. Whirlpool Corp., 517 S.W.2d 262, 269 (Tex.1974); Hayek v. Western Steel Co., 478 S.W.2d 786, 795 (Tex.1972).

A.

Relying heavily upon Jones v. Mid-State Homes, Inc., 163 Tex. 229, 356 S.W.2d 923 (1962), and Perkins Constr. Co. v. Ten-Fifteen Corp., 545 S.W.2d 494 (Tex.Civ.App.--San Antonio 1977, no writ), Porras and the Bank first contend that Blanco's lien is invalid because it does not contain a legally sufficient description of the property upon which the lien is claimed. ⁴ In Jones and Perkins, the courts were faced with mechanics' lien affidavits that described the subject property merely as a quantity of acreage out of a larger tract. ⁵ Concluding that such descriptions, without more, failed to identify the property to be charged with the lien to the exclusion of other parcels within the parent tract, the courts there found the purported mechanics' liens invalid.

To summarize the holdings of Jones and Perkins is to highlight the critical distinction between those cases and this one. Blanton's affidavit does not merely purport to fix a lien upon an unidentified 1,500 acres out of Porras's 1,845-acre tract; instead, it describes the 1,500 acres as those on which Blanco performed clearing, leveling, and "dirt work."

As the Bank and Porras readily admit, a mechanics' lien affidavit need not contain a metes and bounds survey of the property to be charged with the lien. Instead, a land description is "legally sufficient" within the meaning of section 53.054(a)(6) if it contains a "nucleus" of information that could "enable a party familiar with the locality to identify the premises intended to be described" with reasonable certainty. Scholes v. Hughes, 77 Tex. 482, 14 S.W. 148, 149 (1890).

Here, the evidence established that, prior to Blanco's clearing and leveling operations, Porras's land was densely forested and covered with deep ravines and gullies. Several witnesses familiar with the property testified that it was possible to identify those acres that Blanco had cleared and leveled. Blanco's mechanics' lien affidavit thus contains an adequate "nucleus of information" and therefore complies with section 53.054(a)(6). ⁶

B.

The Bank and Porras next assert that Blanco's lien is invalid for failure to comply with Tex.Prop.Code Ann. Sec. 53.054(a)(1) in that Blanton's "affidavit for mechanics' and materialmen's lien" is not in fact an affidavit. An affidavit is statutorily defined in Texas as "a statement in writing of a fact or facts signed by the party making it, sworn to before an officer authorized to administer oaths, and officially certified to by such officer under his seal of office." Tex.Gov't Code Ann. Sec. 312.011(1) (emphasis added). Thus, an affidavit must contain a notary's statement that the affiant was duly sworn; a mere acknowledgement by a notary that a document was executed for a particular purpose is insufficient. See, e.g., Sugarland Business Center, Ltd. v. Norman, 624 S.W.2d 639, 641 (Tex.App.--Houston [14th Dist.] 1981, no writ); Perkins, 545 S.W.2d at 498.

Blanton's self-styled "affidavit" begins with the words "[b]efore me, the undersigned authority, personally appeared ZANE BLANTON, president of Blanco, Inc., ... who, upon his oath, deposed and stated ..." and concludes with a notary's seal and acknowledgement that the document was executed as the act of Blanco. Although Blanco concedes that the acknowledgement alone is insufficient, it argues that the first sentence of the affidavit qualifies as a notary's statement that Blanton was duly sworn. We agree.

In Norcross v. Conoco, Inc., 720 S.W.2d 627 (Tex.App.--San Antonio 1986, no writ), the court upheld the validity of an affidavit that began "[b]efore me, the undersigned authority, on this day personally appeared JOHN W. NORCROSS ... and after having been duly sworn, did state.... that said allegations are true and correct," and ended with a notary's seal, acknowledgement, and signature. Explaining that "no particular terminology is required ... to render a document an affidavit" and that "[i]t is the substance and not the form of an affidavit that is important," id. at 630, the court rejected Conoco's argument that the affidavit was fatally defective because it did not state that it was "subscribed and sworn to" before a notary public. Here, as in Norcross, the affidavit at issue indicates that it was "sworn to before an...