Debra Chris Montgomery Kroupa Williams v. Wachovia Mortg. Corp.

• Decision Date: 11 July 2013
• Docket Number: No. 05–12–00038–CV.,05–12–00038–CV.
• Citation: 407 S.W.3d 391
• Parties: Debra Chris Montgomery Kroupa WILLIAMS, Appellant v. WACHOVIA MORTGAGE CORP., Robert W. Williams, Appellees.
• Court: Texas Court of Appeals

407 S.W.3d 391

Debra Chris Montgomery Kroupa WILLIAMS, Appellant

v.WACHOVIA MORTGAGE CORP., Robert W. Williams, Appellees.

No. 05–12–00038–CV.

Court of Appeals of Texas, Dallas.

July 11, 2013.

Jimmy Lynn Verner Jr., Verner & Brumley Family Law, Dallas, for Appellant.

Clint Joseph Westhoff, Goranson Bain, LLC, Plano, John M. Ledyard, Fidelity National Title Insurance Co., Irving, for Appellees.

Before Justices LANG, MYERS, and EVANS.

OPINION

Opinion by Justice MYERS.

Appellant Debra Chris Montgomery Kroupa Williams appeals from a partial summary judgment granted in favor of appellees Wachovia Mortgage Corporation and Robert Williams. In four issues, appellant contends the trial court erred by granting summary judgment because her claim is not barred by limitations, judicial estoppel, or ratification. We affirm.

Background And Procedural History

This appeal arises out of a common law relationship between Debra Chris Montgomery Kroupa Williams (Kroupa) and Robert Williams (Williams), and their subsequent divorce. According to the record, they began living together in 1995 at the following property:

Lot 1, in Block A/7288 of Crest Meadow Estate Edition, an addition to the City of Dallas, Dallas County, Texas, according to the map or plat thereof recorded in Vol. 68052, Page 1809, of the Map Records of Dallas County, Texas, and more commonly known as 7631 Meadow Road, Dallas, Texas 75230.

On August 21, 2002, Williams took out a $154,000 home equity loan on the Meadow Road residence from World Savings Bank, FSB. In applying for the loan and in the final executed loan documents, Williams represented himself to be an “unmarried man.”

Both parties agree that Kroupa did not execute any of the loan paperwork and that, at the time he took out the home equity loan, Williams did not tell Kroupa about it. They disagree, however, on when Kroupa first learned about the loan. Kroupa recalled that Williams first told her about the home equity loan approximately one month after he took out the loan. In his affidavit, Williams stated that he told Kroupa “about the loan and the lien almost immediately and certainly prior to the end of September 2002.”

In 2004, Kroupa sued Robert Williams for divorce. On March 9, 2006, a jury returned a verdict that Williams and Kroupa had been married at common law since April 27, 1992. The trial court divorced Kroupa and Williams by a final decree of divorce signed on December 20, 2007. The trial court awarded Kroupa the residence at 7631 Meadow Road.

On September 22, 2008, Kroupa filed an “Original Petition to Remove Cloud on Title and to Quiet Title.” ¹ Kroupa sued Wachovia as the successor in interest to World Savings Bank, FSB, as well as three other defendants (the Herring Trust, Myrtle Ann Smith, and the “Smith and Smith” Trust) to whom Williams allegedly conveyed the Meadow Road residence during the pendency of the divorce proceedings. Among other relief, Kroupa requested a declaratory judgment that the home equity lien was void. Wachovia counterclaimed against Kroupa and sued Williams as a third-party defendant. Williams counterclaimed against Wachovia and cross-claimed against Kroupa.

Wachovia and Williams then filed a joint motion for partial summary judgment against Kroupa. The motion alleged that the residual four-year statute of limitations found in section 16.051 of the Texas Civil Practice and Remedies Code² barred Kroupa's suit, that she was judicially estopped from bringing the suit, and that she had ratified the home equity lien.³

The trial court granted the motion for partial summary judgment in a memorandum order signed on October 24, 2011. The order stated that Kroupa's claim was “barred by Statute of Limitations, Judicial Estoppel, and Ratification.” The trial court considered the remaining issues in the case on December 14, 2011. In its final order signed three days later, the trial court awarded Williams his attorney's fees and declared that neither the Herring Trust, Myrtle Ann Smith, nor the “Smith and Smith” Trust, all of whom failed to appear in the case and defaulted, held any interest in the Meadow Road residence. This appeal followed.

Discussion

In her first issue, Kroupa contends the four-year residual statute of limitations does not bar an equitable proceeding to remove a cloud on title or to quiet title when title to the homestead is clouded by a void home equity lien. In her second issue, Kroupa argues, alternatively, that the four-year statute of limitations does not bar her lawsuit because title to the homestead is clouded by a void home equity lien that is incurable under section 50(a)(6)(Q) of article XVI of the Texas Constitution.

Standard of Review

We review de novo the trial court's summary judgment. Mid–Century Ins. Co. of Tex. v. Ademaj, 243 S.W.3d 618, 621 (Tex.2007); Beesley v. Hydrocarbon Separation, Inc., 358 S.W.3d 415, 418 (Tex.App.-Dallas 2012, no pet.). When reviewing a traditional summary judgment granted in favor of the defendant, we determine whether the defendant conclusively disproved at least one element of the plaintiff's claim or conclusively proved every element of an affirmative defense. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex.1997). A matter is conclusively established if ordinary minds cannot differ as to the conclusion to be drawn from the evidence. Beesley, 358 S.W.3d at 418. The movant must show there was no genuine issue of material fact and that it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 800 (Tex.1994). In deciding whether a disputed material fact issue exists precluding summary judgment, we must take evidence favorable to the non-movant as true, and we must indulge every reasonable inferenceand resolve any doubts in favor of the non-movant. Sysco Food Servs., 890 S.W.2d at 800. We will affirm the summary judgment if any of the theories presented to the trial court are meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex.2003); Bullock v. American Heart Ass'n, 360 S.W.3d 661, 668 (Tex.App.-Dallas 2012, pet. denied).

Home Equity Liens Under the Texas Constitution

The Texas Constitution was amended in 1998 to allow homeowners to voluntarily encumber their homestead with a lien in return for an extension of credit, i.e., a “home equity loan.” See Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d 834, 837 (Tex.App.-Dallas 2008, no pet.). Sections 50(a)(6)(A)-(Q) of the Texas Constitution govern home equity liens. Id. The provisions include various requirements, such as that the amount of a home equity loan may not exceed eighty percent of the fair market value of the homestead (section 50(a)(6)(B)); a twelve-day “cooling off” period must pass before the home equity loan can be closed (section 50(a)(6)(M)); the lien on the homestead is valid only if it is closed at the office of the lender, an attorney at law, or a title company (section 50(a)(6)(N)); and fees incurred in taking out the home equity loan may not exceed three percent of the amount of the loan (section 50(a)(6)(E)). SeeTex. Const. art. XVI, §§ 50(a)(6)(B), 50(a)(6)(M), 50(a)(6)(N), 50(a)(6)(E). Section 50(a)(6)(Q)(x) is a “cure” provision that allows lenders to remedy violations of the home equity requirements. See id.§ 50(a)(6)(Q)(x). Prior to 2003, section 50(a)(6)(Q)(x) provided that the lender had an opportunity to “cure” violations of the home equity loan requirements within a “reasonable time” after the lender or holder was notified by the borrower of the lender's failure to comply. See id.§ 50(a)(6)(Q)(x) (amended 2003); see also Doody v. Ameriquest Mortg. Co., 49 S.W.3d 342, 345–46 (Tex.2001). This section of the constitution did not, prior to 2003, “include any specific provisions directing a lender how to cure a loan's constitutional defect or setting a time limitation on when a cure must be tendered.” See Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 155 (Tex.App.-Fort Worth 2007, pet. denied). Those provisions were enacted with passage of the September 2003 amendments to the Texas Constitution. Id. at 157.

In 2003, section 50(a)(6)(Q)(x) was amended to give the lender sixty days, rather than “a reasonable time,” to cure violations. See Act of May 24, 2003, 78th Leg., R.S., S.J.R. No. 42, § 1, 2003 Tex. Gen. Laws 6219, 6222. The 2003 amendments also added provisions such as subsection 50(a)(6)(Q)(xi), which provides in part:

the lender or any holder of the note for the extension of credit shall forfeit all principal and interest of the extension of credit ... if the lien was not created under a written agreement with the consent of each owner and each owner's spouse, unless each owner and each owner's spouse who did not initially consent subsequently consents.

See id. (current version at Tex. Const. art. XVI, § 50(a)(6)(Q)(xi)).

Section 50(a)(6) of the Texas Constitution does not contain a specific statute of limitations period. In Texas, when there is no express limitations period, the residual four-year statute of limitations described in section 16.051 of the Texas Civil Practice and Remedies Code applies. SeeTEX. CIV. PRAC. & REM. CODE ANN. § 16.051 (West 2008) (“Every action for which there is no express limitations period,except an action for the recovery of real property, must be brought not later than four years after the day the cause of action accrues.”).

The Parties' Arguments

Kroupa contends that the home equity lien on the 7631 Meadow Road residence is void as to her because she did not sign the written agreement granting the lien or consent to it. According to Kroupa, the lien is void because of article XVI, § 50(a)(6)(A), which states:

§ 50(a) The homestead of a family, or of a single adult person, shall be, and is hereby protected from forced sale, for the payment of all debts except for: ... (6) an extension of credit that: ... (A) is secured by a voluntary lien on the homestead created under a written...