Deutsche Bank Nat'l Trust Co. v. Stockdick Land Co.

• Court: Texas Court of Appeals
• Writing for the Court: Kem Thompson Frost
• Decision Date: 28 February 2012
• Docket Number: NO. 14-09-00617-CV,14-09-00617-CV
• Citation: Deutsche Bank Nat'l Trust Co. v. Stockdick Land Co., NO. 14-09-00617-CV (Tex. App. Feb 28, 2012)
• Parties: DEUTSCHE BANK NATIONAL TRUST COMPANY, AS INDENTURE TRUSTEE FOR NEW CENTURY HOME LOAN TRUST 2006-2, Appellant v. STOCKDICK LAND COMPANY, Appellee

DEUTSCHE BANK NATIONAL TRUST COMPANY,AS INDENTURE TRUSTEE FOR NEW CENTURY HOME LOAN TRUST 2006-2, Appellant

v.STOCKDICK LAND COMPANY, Appellee

NO. 14-09-00617-CV

Fourteenth Court of Appeals

Dated: February 28, 2012

Appellee's Motion for Rehearing Granted; Affirmed; Opinion of February 3, 2011, Withdrawn, and Majority and Dissenting Opinions on Rehearing filed February 28, 2012.

On Appeal from the 215th District Court

Harris County, Texas

Trial Court Cause No. 2008-60974

DISSENTING OPINION ON REHEARING

A residential real property lien was extinguished by a sale of the property to satisfy a property-tax lien. After the tax sale, the former owners sought to redeem the property under section 34.21 of the Texas Tax Code, which governs redemption of real property sold at a tax sale. The holder of the extinguished lien brought a declaratory-judgment suit against the tax-sale purchaser, arguing that the former owners had redeemed the property and, in the alternative, that the purchaser was precluded under the doctrine of quasi-estoppel from denying that the former owners had redeemed theproperty. The prerequisites of Texas Tax Code section 34.21 were not satisfied, but the trial court erred in granting the purchaser's summary-judgment motion because of fact issues regarding quasi-estoppel. In concluding that the trial court properly granted summary judgment, the majority contradicts binding precedent regarding (1) what a nonmovant must do to raise an affirmative defense in response to a traditional summary-judgment motion and (2) the meaning of certain language in the quitclaim deed executed by the tax-sale purchaser. Rather than affirm, this court should reverse and remand.

FACTUAL AND PROCEDURAL BACKGROUND

The residential real property in question is located on Yoakum Boulevard in Houston, Texas (the "Property"). Gordon Wittenberg and his wife Susan Wittenberg constructed a residence on the Property in 2003, when title to the Property was held by Tribus, Inc. Tribus did not pay all of the property tax due on the Property for 2004, and in 2005 the taxing authorities filed a collection suit against Tribus and Frost National Bank, the holder of the mortgage, seeking to collect the taxes and foreclose the tax lien. On behalf of Tribus, Gordon Wittenberg acknowledged that the taxes were past due and stated that Tribus planned to pay the delinquent taxes under a payment plan.

On May 25, 2006, Tribus conveyed to Susan Wittenberg title to the Property. At the same time, the Wittenbergs¹ refinanced the existing mortgage indebtedness on the Property, which had been held by Frost National Bank. The new indebtedness took the form of a promissory note in the principal amount of $650,000 payable to New Century Mortgage Corporation, secured by a deed-of-trust lien filed for record on June 9, 2006 (the "Bank's Lien"). New Century later assigned this indebtedness and lien to plaintiff/appellant Deutsche Bank National Trust Company, as Indenture Trustee for New Century Home Loan Trust 2006-2 (the "Bank"). Shortly after the closing of the refinancing transaction, most of the property taxes on the Property for 2004 and 2005were paid. Despite these payments, approximately $4,600 in taxes due to the Houston Independent School District for 2005 were not paid. Based on these unpaid taxes, the trial court in the tax suit (the "Tax Court") rendered a final judgment in February 2007, for these taxes plus penalties and interest, for a total amount of $6,847.63. The Tax Court also ordered foreclosure of the tax lien on the Property and sale of the Property, which the Tax Court determined had a market value of $659,100 on the date of trial in January 2007.² Other than the taxing authorities, the only parties to this judgment were Tribus and Frost National Bank.

The tax sale occurred on June 5, 2007, and appellee/defendant Stockdick Land Company ("Stockdick") purchased the Property at this sale for $370,000 in cash. Out of these proceeds from the tax sale, the 2005 taxes that were the basis of the judgment were paid, and the 2006 property taxes on the Property also were paid. After these payments, $335,767.52 of the proceeds from the tax sale remained (the "Remaining Proceeds"). The Tax Court ordered these proceeds disbursed to Tribus.

In December 2007, Stockdick signed a deed (the "Deed") stating as follows:

[Stockdick] . . . for and in consideration of $462,500 consisting of cash in the amount of $370,000 and one promissory note in the principal sum of $92,500 payable to the order of [Stockdick], bearing interest at the rate therein provided, said note . . . being secured by vendor's lien and superior title retained herein in favor of [Stockdick], and being also secured by Deed of Trust of even date from Grantee to Wade A. Riner, Trustee, the receipt and sufficiency of which is hereby acknowledged and confessed, does hereby sell, transfer, and deliver unto Gordon Wittenberg and wife, Susan Wittenberg whose address is [address of the Property] (hereinafter referred to as "Grantee"), all of Grantor's right, title, and interest in [the Property]. This deed is made without warranty, express or implied, and is executed pursuant to redemption of the Property by Grantee from that certain tax sale conducted on or about June 5, 2007 under Cause No. 2005-74535 styled, Harris County, et al. v. Tribus, Inc., et al., 80th Judicial District Court, Harris County, Texas.

(emphasis added). The Deed and the deed of trust mentioned therein were filed forrecord on December 10, 2007. The promissory note mentioned in the Deed was executed by the Wittenbergs in the original principal amount of $92,500, with an interest rate of ten percent per year (the "Note"). The Note and deed of trust were signed two days before the Deed was signed. On July 31, 2008, all principal and interest ($98,582.19) was due under the Note. The Wittenbergs did not pay the amounts due under the Note.

David Petroni of Carrington Mortgage Services, LLC sent a letter to Stockdick on September 23, 2008, stating his understanding that Stockdick had purchased the Property at a tax sale in June 2007 and had obtained a deed for the Property. Petroni stated that Carrington had an active loan on the Property and desired to regain possession of the Property. Petroni requested that Stockdick provide a redemption quote. Stockdick informed Petroni that the payoff amount was $113,777.54, based upon the past-due amount owing under the Note. Neither Carrington nor the Bank made any payment to Stockdick.

Less than a month later, on October 15, 2008, the Bank filed this declaratory-judgment suit in the trial court below. Stockdick proceeded with a non-judicial foreclosure sale of the Property on November 4, 2008. Stockdick purchased the Property at this sale for $50,000, and the trustee's deed reflecting this sale was filed for record on November 11, 2008.

In its declaratory-judgment suit, the Bank alleged that the Wittenbergs exercised their statutory right to redeem the Property and that this redemption resulted in the Deed. According to the Bank, as a result of this redemption, the Bank's Lien was reinstated as a valid and subsisting mortgage against the Property, and this lien was senior and superior to Stockdick's deed-of-trust lien ("Stockdick's Lien"). The Bank asserted that Stockdick is estopped from denying that the Deed effected a redemption of the Property. The Bank sought declaratory relief regarding the relative lien priorities of the Bank's Lien and Stockdick's Lien. Among other things, the Bank sought declarations that (1) the Wittenbergs redeemed the Property after the tax sale, thus reinstating the Bank's Lien as a valid lien on the Property, (2) the Bank's Lien is senior and superior to Stockdick's Lien, and (3) any foreclosure of Stockdick's Lien has no effect on the validity, seniority,or priority of the Bank's Lien. The Bank also requested reasonable and necessary attorney's fees under section 37.009 of the Texas Civil Practice and Remedies Code.

The Bank filed a traditional motion for summary judgment on all of its claims for declaratory relief. Stockdick filed a traditional motion for summary judgment, asserting the following grounds:

(1) The Wittenbergs did not redeem the Property because they did not comply or substantially comply with the requirement that they pay Stockdick $92,500 in cash, which was the twenty-five percent premium required by section 34.21 of the Tax Code.³

(2) Stockdick maintained its superior title to the Property by reserving a vendor's lien to secure payment of the Note.

(3) The Bank waived its contention that the Wittenbergs redeemed the Property.

(4) The Bank may not assert its claims under the Declaratory Judgments Act; rather, this action is really a trespass-to-try-title action.

The trial court granted Stockdick's motion, denied the Bank's motion, and rendered judgment that the Bank take nothing.

While the trial court still had plenary power over this case, the court granted the Bank leave to supplement its petition to add new claims based in part upon the following allegations:

• The constable sold the Property to Stockdick at the tax sale for $370,000. After satisfying the judgment and costs relating to the sale, the constable returned the excess proceeds to the district clerk. New Century received no notice of the existence of these proceeds.

• Attorney Stephen Riner filed a motion on behalf of Tribus, asserting that the Remaining Proceeds belonged to Tribus as the former owner of the Property. In this motion Tribus asked the Tax Court to order the district clerk to disburse the Remaining Proceeds to Tribus. This motion was served upon Frost National Bank but not upon New Century. Riner later served as Stockdick's attorney of record in the case under review.

• On September 17, 2007, the Tax Court granted Tribus's motion and ordered the district clerk to disburse the Remaining Proceeds to Riner as attorney for Tribus.

• The Remaining Proceeds were transferred to

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