Giese v. NCNB Texas Forney Banking Center

• Decision Date: 17 June 1994
• Docket Number: No. 05-93-00818-CV,05-93-00818-CV
• Citation: 881 S.W.2d 776
• Parties: Nola Charlotte GIESE, Appellant, v. NCNB TEXAS FORNEY BANKING CENTER, Appellee.
• Court: Texas Court of Appeals

Page 776

881 S.W.2d 776

Nola Charlotte GIESE, Appellant, v. NCNB TEXAS FORNEY BANKING CENTER, Appellee.

No. 05-93-00818-CV.

Court of Appeals of Texas,

Dallas.

June 17, 1994.

Elland Archer, Mesquite, for appellant.

Jeffery R. Seewald, Dallas, for appellee.

Before THOMAS, OVARD and WHITTINGTON, JJ.

OPINION

THOMAS, Justice.

In this case of first impression, we must decide the proper method for perfecting a lien on a mobile home that is affixed to land and the priority of competing liens. Nola Charlotte Giese appeals a judgment rendered in favor of NCNB Texas Forney Banking Center (the Bank). In six points of error, appellant generally complains the trial court erred in granting summary judgment because:

she properly perfected her lien under Texas law before the Bank perfected its lien;

the Bank's summary-judgment evidence was insufficient to support the trial court's judgment;

the Bank's motion for summary judgment did not address her cause of action for damages in connection with the removal of the mobile home; and

she was improperly denied an "oral hearing".

We affirm the summary judgment as it relates to the priority of the liens. We reverse the trial court's judgment and remand the cause on the issue of whether the Bank's manner of removing the mobile home caused damages to the various improvements.

FACTUAL BACKGROUND

Appellant owned land in Kaufman County, Texas. She placed a 1981 Schult doublewide mobile home on the property and installed plumbing, electricity, a septic system, porch, and deck. On May 22, 1984, appellant sold the property, along with the improvements, to Virginia and John Perry Farmer. The sale was secured by a deed of trust and note and by a financing statement on the mobile home. Appellant filed all of these documents with the county clerk's office.

In February 1986, First Republic Bank Forney ¹ made a loan to the Farmers. This loan was secured by the mobile home. First Republic recorded its lien with the State, and the lien was noted on the certificate of title. In September 1988, the Bank consolidated two of the Farmers' notes and secured the new note in part by the mobile home. The Farmers gave the Bank a security interest in the mobile home.

In 1989, the Farmers defaulted on their note to appellant. Thereafter, appellant began foreclosure proceedings. At the same time, the Farmers failed to make their note payments to the Bank. Claiming a superior lien, the Bank foreclosed on the note, repossessed the mobile home, sold it, and applied the proceeds to the loan balance.

Appellant filed this action seeking a declaration that she possessed the superior lien. Additionally, appellant sought damages for the destruction to the porch, deck, air conditioning, plumbing, and septic system caused when the mobile home was removed from the land.

STANDARD OF REVIEW

The function of a summary judgment is not to deprive a litigant of the right to a full hearing on the merits of any real issue of fact but to eliminate patently unmeritorious claims and untenable defenses. Gulbenkian v. Penn, 151 Tex. 412, 416, 252 S.W.2d 929, 931 (1952). In reviewing a summary-judgment record, this Court applies the following standards:

1. The movant for summary judgment has the burden of showing there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.

2. In deciding whether there is a disputed material fact issue precluding summary judgment, we must take the evidence favorable to the nonmovant as true.

3. We indulge every reasonable inference in favor of the nonmovant and resolve any doubts in her favor.

See Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). The purpose of the summary-judgment rule is not to provide either a trial by deposition or a trial by affidavit but is to provide a method of summarily terminating a case when it clearly appears that only a question of law is involved and that no genuine issue of fact remains. Port Distrib. Corp. v. Fritz Chem. Co., 775 S.W.2d 669, 671 (Tex.App.--Dallas 1989, writ dism'd by agr.).

To show its right to summary judgment, the defendant must either disprove an essential element of the plaintiff's cause of action as a matter of law or conclusively establish all elements of its defense. See Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). An issue is conclusively established if ordinary minds cannot differ as to the conclusion to be drawn from the evidence. See Triton Oil & Gas Corp. v. Marine Contractors & Supply Inc., 644 S.W.2d 443, 446 (Tex.1982).

PRIORITY OF LIENS

1. Parties' Contentions

Appellant contends that the summary judgment was improper because her perfected lien had priority. Specifically, she asserts that when she sold the land and mobile home to the Farmers, she treated the sale as a real estate transaction. Therefore, she argues she properly perfected her purchase money lien by filing the deed of trust and financing statement describing the mobile home in the county records. Appellant claims her lien is superior since her documents were filed almost two years before the Bank filed its lien with the State.

The Bank, however, counters that appellant did not properly perfect her lien because she failed to follow the applicable statutory law. The Bank argues that if appellant desired to record the lien in the real property records, she had to first cancel her title document. Otherwise, the Bank contends appellant was required to file her lien with the Texas Department of Licensing and Regulation, which regulates the titling of mobile homes. Because appellant did neither, the Bank claims it is the superior lienholder as evidenced by the certificate of ownership, which reflects a lien in its favor.

2. Perfecting a Security Interest in Mobile Homes

Perfection of security interests in mobile homes is governed by the Texas Manufactured Housing Standards Act (the Act). ² TEX.BUS. & COM.CODE ANN. § 9.302(c)(2) (Vernon 1991). The Department of Licensing and Regulation regulates manufactured housing in Texas and is authorized to adopt rules regarding application and issuance of title documents relating to manufactured homes. ³ Act of June 17, 1981, 67th Leg., R.S., ch. 815, § 19, 1981 Tex.Gen.Laws 3084, amended by Act of June 16, 1989, 71st Leg., R.S., ch. 1039, §§ 2.26, 2.27, 1989 Tex.Gen.Laws 4172, 4196-99. A mobile home is included in the definition of manufactured home. TEX.REV.CIT.STAT.ANN. art. 5221f, § 3(17). The Department issues title documents, which contain the dates of any liens and the names and addresses of any lienholders. TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(a)(2)(F).

The Act defines lien as:

[A] security interest that is created by any kind of lease, conditional sales contract, deed of trust, chattel mortgage, trust receipt, reservation of title, or other security agreement of whatever kind or character if an interest, other than an absolute title, is sought to be held or given in a manufactured home, and any lien on a manufactured home that is created or given by the constitution or statute.

TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(a)(6). A "security interest" is an interest in personal property or fixtures which secures payment or performance of an obligation. TEX.BUS. & COM.CODE ANN. § 1.201(37)(A).

A lien, which has been registered and recorded with the Department, is notice to all persons that the lien on the mobile home exists. TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(k). Such liens have priority in the chronological order of recordation over all liens or claims against the mobile home. TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(k).

If a mobile home is affixed to land, as in the instant case, the Act provides that the original title document may be surrendered to the Department for cancellation. TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(j) (emphasis added). The party must give the Department the address of the real property when the title document is surrendered, and the Department may require the party to file other information. TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(j). If a lien has been registered or recorded on the mobile home, the Department may not cancel the title document until the lien is released. TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(j).

The Department is charged with adopting rules consistent with the statute for the titling of mobile homes previously registered or titled in Texas or another state. TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(q). The rules must protect a lienholder recorded on a certificate or document of title. TEX.REV.CIV.STAT.ANN. art. 5221f, § 19(q).

3. Application of Law to Facts

For the Bank to prevail, it had to prove that its rights in the mobile home were superior to any rights possessed by appellant. The Bank presented the sworn affidavit of one of its officers and the certificate of ownership noting a lien in its favor. ⁴ This lien is the only lien recorded on the document. Thus, the question is whether appellant's filing in the county records was a prior perfected lien.

The answer turns on language in the Act which provides that the original title document may be surrendered and canceled if the mobile home is affixed to land. We conclude that the legislature intended this language to allow two methods of perfecting a lien on a mobile home permanently attached to land: (1) a party can perfect her lien in the real property records if she surrenders and cancels her title document; or (2) if the party does not surrender and cancel her title, the party must note the lien on the certificate of title.

A contrary conclusion would lead to confusion for subsequent potential creditors trying to determine if prior liens exist before accepting a mobile home as collateral. When a lien against a mobile home is properly recorded, it is notice to all persons of the existence of the security interest in that property. When perfection is attempted in the manner described in this case, there is an original certificate of...