Danbill Partners, L.P. v. Sandoval

• Decision Date: 30 November 2020
• Docket Number: No. 08-19-00139-CV,08-19-00139-CV
• Court: Texas Court of Appeals
• Parties: DANBILL PARTNERS, L.P., Appellant, v. Saul SANDOVAL and Veronica Sandoval, Appellees.

621 S.W.3d 738

DANBILL PARTNERS, L.P., Appellant,

v.Saul SANDOVAL and Veronica Sandoval, Appellees.

No. 08-19-00139-CV

Court of Appeals of Texas, El Paso.

November 30, 2020

ATTORNEY FOR APPELLANT: Merwan Bhatti, Mounce, Green, Myers, Safi, Paxson & Galatzan, P.C., P.O. Drawer 1977, El Paso, TX 79999-1977.

ATTORNEY FOR APPELLEES: Albert Nabhan Jr., The Law Offices of Victor H. Falvey, PLLC, 8732 Alameda Ave., El Paso, TX 79907.

Before Alley, C.J., Rodriguez, and Palafox, JJ.

OPINION

YVONNE T. RODRIGUEZ, Justice

Appellant, Danbill Partners, L.P., brings this appeal after the trial court enjoined them from foreclosing on a property whose rightful ownership is disputed. Appellees, Saul and Veronica Sandoval, brought a trespass to try title claim on the property, their primary home, they named Vanessa Maese, from whom they purchased the property, and Appellant, as a lienholder of the property. Appellant subsequently initiated foreclosure proceedings against Maese, to whom it sold the property some years earlier and who allegedly still owed money under a previous note, which was secured by the property. Following a hearing, the trial court granted a temporary injunction in Appellees' favor, which prohibited Appellant from foreclosing pending the outcome of a trial on the merits. This appeal followed.

BACKGROUND

Factual Background

Appellees' property is in Fabens, Texas, in El Paso County (the Property). The Appellees contracted with Vanessa Maese to purchase the Property on November 4, 2013. The Appellees believed they were purchasing the Property in fee simple. The Appellees were subsequently informed Maese owed money on the Property under a note to Appellant. Accordingly, Appellees made payments on their note with Maese directly to Appellant.

On August 2, 2018, Appellees requested a payoff amount from Maese to refinance any amounts still owed to Appellant. The payoff Maese provided to Appellees included a ten percent prepayment penalty. Then Appellees requested a payoff directly from Appellant who refused to provide it. As a result, Appellees filed the instant lawsuit seeking to quiet title on the Property, and other claims related to their contract with Maese.

In their petition, Appellees allege a claim for trespass to try title against Maese and Appellant, arguing they performed their obligations under their contract with Maese. They also seek declaratory relief under the Texas Uniform Declaratory Judgment Act, asking the trial court to declare the contract between the Appellees and Maese valid and enforceable and request title to the Property to be transferred to them from Maese. They also assert breach of contract, quantum meruit, estoppel, and constructive trust claims related to their contract with Maese.

Foreclosure and Application for Temporary Injunction

Following receipt of service of the Appellees' lawsuit, Appellant filed a notice of foreclosure and scheduled a sale of the Property on May 7, 2019. In response, Appellees filed an application for temporary restraining order, temporary injunction, and permanent injunction on April 23, 2019. In support, Appellees argued they never missed a payment under the terms of their agreement with Maese and were actively trying to negotiate a payoff of the amount Maese owed to Appellant. Appellees claimed if the foreclosure sale was not enjoined, they would be wrongfully deprived of their homestead property, on which they had improved the value and been led to believe was theirs in fee simple. They further argued there was no adequate remedy at law which could compensate them for loss of the property through a foreclosure sale. Their application sought preservation of the status quo until their trespass to try title suit was finalized. Appellees attached affidavits to their application verifying the facts alleged and the harm they would suffer if the sale was not enjoined.

In its response to Appellees' application, Appellant alleged it was legally allowed to foreclose on the Property because of Maese's default on her loan with them. It argued Appellees had an adequate remedy against Maese under the contractual claims against her, which could still be pursued if Appellant could foreclose on the Property. Appellant argued Appellees would not be irreparably harmed because their claims could be adequately compensated with monetary damages. Finally, Appellant argued only a bond of $15,544.45—comprised of principal and interest due under Maese's note, plus attorney fees—would adequately protect Appellant if a temporary injunction was granted.

Hearing on Application for Temporary Injunction

The hearing on both the application for temporary restraining order and temporary injunction was held on May 1, 2019. Appellees did not attend the hearing. The trial court ruled the application for temporary restraining order would be granted. Bond, payable by the Appellees, was set at $500. The trial court then proceeded with the hearing on the temporary injunction.

Appellant's first witness was Randy Bills. Bills is the manager of a company called Allimat, which is Appellant's general partner. Appellant manages loans on approximately seventy-two properties. Bills testified regarding the $20,000 promissory note between Appellant and Maese and confirmed the note contained a prepayment penalty. He testified there was no loan or other agreement between Appellant and Appellees, and Appellant's note for the Property was only between Appellant and Maese. Bills testified the note retained a vendor's lien on the Property. Further, the note provided Appellant could declare the loan immediately due and payable if the Property was transferred or sold without obtaining Appellant's prior written consent. Bills confirmed Appellant was unaware and did not consent to Maese's transfer of the loan to Appellees. However, he stated it was not uncommon for a "client" to rent out a property and instruct the renter to pay Appellant directly.

Appellant's Exhibit 4 contained a list of the payments received on Maese's loan. Payments fell behind in late 2017; the January 2018 payment was applied to the amount due for October 2017. At that point, Maese was three months past due on her loan with Appellant.

In January 2019, Appellant sent Maese a Notice of Default and Intent to Accelerate letter, informing her that she would owe $1,421.62 in late payments and other fees by February 20, 2019. Appellant informed Maese they would not accept partial payments of the total amount due. Appellant testified on April 12, 2019, the property was posted for foreclosure and a notice of acceleration was sent to both Maese and Appellees.

On cross-examination, Bills averred he was unable to monitor whether Appellant's clients were selling its properties to third parties while the notes owed to Appellant remained outstanding. Bills prepares all of Appellant's loan documents. Appellant limits the number of loans it writes each year to comply with the Truth in Lending Act to avoid having to be licensed.

Bills, further, acknowledged Maese's notice of acceleration was sent to the wrong address, and accordingly, she may not have been aware of the loan acceleration. Bills also acknowledged the tax appraisal district listed Appellees as the title owners of the Property. Bills confirmed when Maese and Appellees executed the sale of the Property, which was then properly filed, Appellant was put on notice of the transfer of Maese's interest. However, Appellant did not accelerate Maese's note until Appellees requested a payoff amount of Maese's loan.

Maese testified in 2003 she signed a loan agreement for $20,000.00 with Appellant for the Property. She stated she did not remember whether the agreement allowed her to sell the Property, but confirmed she never sought Appellant's permission. When her husband died and she could not pay the loan, she sold the Property to Appellees. Maese was "about to lose the property" and wanted to sell it to avoid foreclosure.

Maese never received, nor had she seen, the notice of default Appellant sent for the Property. However, she was aware the loan payments were late. She received the notice regarding the foreclosure sale Appellant's counsel sent her in April of 2019. Maese was aware she was still obligated to Appellant on the note and had another loan outstanding with Appellant. Maese spoke to Appellees regarding the late payments and paying the past due amounts. At that point, Appellees retained an attorney to obtain the payoff amount directly from Appellant.

Maese believed Appellant knew another individual was paying on her note since Appellant was receiving payments by someone other than Maese. Maese stated she did not give Appellant notice of the sale of the Property.

DISCUSSION

Appellant presents two issues on appeal: 1) Did the trial court abused its discretion in granting the temporary injunction; and 2) is the temporary injunction order defective in form and therefore void.

Standard of Review

A trial court has broad discretion in whether to grant or deny an application for temporary injunction. Butnaru v. Ford Motor Co. , 84 S.W.3d 198, 204 (Tex. 2002). An order granting injunctive relief should be reversed only where the trial court abuses its discretion. Id. , (citing Walling v. Metcalfe , 863 S.W.2d 56, 58 (Tex. 1993) ). A reviewing court's own judgment must not be substituted for the judgment of the trial court except where the latter's action was "so arbitrary that it exceeded the bounds of reasonable discretion." Id. , (citing Johnson v. Fourth Ct. of Appeals , 700 S.W.2d 916, 918 (Tex. 1985) ; Davis v. Huey , 571 S.W.2d 859, 861-62 (Tex. 1978) ); see also Tri-Star Petroleum Co. v. Tipperary Corp. , 101 S.W.3d 583, 587 (Tex.App.--El Paso 2003, pet. denied). Similarly, we must not resolve the merits of the underlying case. Tri-Star Petroleum Co. , 101 S.W.3d at 587, (citing Davis v. Huey , 571 S.W.2d 859, 861-62 (Tex. 1978) ). We likewise may not reverse the trial court's judgment where conflicting evidence was...