Khera Interest Inc. v. Wilmington Tr.
| Decision Date | 06 April 2023 |
| Docket Number | 14-21-00404-CV |
| Parties | KHERA INTEREST INC., Appellant v. WILMINGTON TRUST NATIONAL ASSOCIATION NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE OF THE MFRATRUST 2015-1, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 151st District Court Harris County, Texas Trial Court Cause No. 2020-11448.
Panel consists of Justices Zimmerer, Spain, and Poissant. (Spain J., concurring without opinion).
Appellant Khera Interest, Inc. ("Khera") appeals a summary judgment granted in favor of appellee Wilmington Trust National Association not in its individual capacity but solely as trustee of the MFRA Trust 2015-1 ("Wilmington"). In three issues, Khera argues the trial court erred by (1) entering a final judgment that did not dispose of all claims and all parties; (2) granting a declaratory judgment to Wilmington's relating to the superiority of title, and because this declaratory relief sought is duplicative of Wilmington's judicial foreclosure action; and (3) denying Khera's motion to compel discovery and failing to overrule Wilmington's discovery objections. We affirm.
On February 19, 2020, Wilmington filed a lawsuit against Bonita Hicks ("Hicks") and Khera, asserting a claim for breach of contract against Hicks and a cause of action for judicial foreclosure on a lien against Hicks and Khera. Wilmington alleged that Hicks executed a note and deed of trust using the property as collateral for the indebtedness. Wilmington subsequently became the holder of the mortgage, and Hicks failed to pay the mortgage in full. Wilmington then filed this lawsuit to foreclose on the property, which it alleged was currently owned by Khera after Khera purchased the property at a foreclosure sale conducted by the homeowner's association after Hicks defaulted on payment of association dues.
On October 29, 2020, Wilmington filed its first amended petition, adding a cause of action against Khera to quiet title. Wilmington alleged that Khera "is the current owner of the Property . . . ." As to its breach-of-contract claim against Hicks, Wilmington's live pleading stated that "[b]ecause of a material breach of the Loan Agreement, [Wilmington] seeks judgment allowing a non-judicial foreclosure pursuant to [Texas Property Code] § 51.002, and the terms of the Loan Agreement with respect to all Defendants who are obligors of the Loan Agreement or acquired the Property subject to the Defendant's debts." See Tex. Prop. Code Ann. § 51.002 (titled "Sale of Real Property Under Contract Lien"). As to its claims for judicial foreclosure, Wilmington alleged that a note was made to acquire the property or refinance a debt against the property; Hicks executed and delivered a deed of trust conveying the property in trust as collateral to secure payment of the loan; the note and deed of trust remain unpaid; "Khera's ownership of the Property is subject to payment in full of Wilmington's lien"; and neither defendant had tendered payoff of the note and deed of trust. As to its quiet-title claim against Khera, Wilmington alleged that "[pursuant to Section 9.12 of HOA's restrictions and Declarations, the lien of the assessments shall be subordinate to the lien of any mortgagee, [and] Khera's interest was subordinate to [Wilmington's] superior first lien." Thus, Wilmington argued, it is "entitled to the equitable determination that [Wilmington] holds superior clear title to the Property and that Khera's interest is subordinate to [Wilmington's] interest." In relevant part, Wilmington sought "at least $150,154.85 in damages" "[b]ased on Defendant's breach of her obligations under the Loan Agreement."
Wilmington filed a motion for default judgment as to Hicks.[1] On October 30, 2020, the trial court entered an interlocutory default judgment against Hicks, awarding Wilmington with a judgment allowing judicial and non-judicial foreclosure of its lien on the property. See id. The order further provided that "[t]he amount owed under the Loan Agreement at issue is $150,154.85 as of February 26, 2020."
On December 7, 2020, Khera filed a counter-petition against Wilmington, asserting a claim for quantum meruit and requesting a declaratory judgment. Khera sought declarations that the deed of trust was unenforceable as to Khera; that Wilmington had no legal, possessory, or any other right to the subject property; and that Khera held title to the property free and clear of any liens or other encumbrances.
On December 14, 2020, the trial court granted Wilmington's motion for summary judgment as to Khera's claims, explicitly incorporating the November 16, 2020 interlocutory default judgment as to Hicks. The trial court awarded Wilmington $10,925.69 in damages.
On December 17, 2020, Wilmington filed a motion to vacate "and/or" reconsider the order granting its summary judgment motion against Khera, averring that the payoff amount of the loan agreement awarded as damages in the final judgment was inaccurate. Wilmington argued the amount awarded in the order was the amount owed to bring the loan current and that the amount owed under the note was $150,154.85. The trial court granted the motion on December 28, 2020, ordering that its order from December 14, 2020, "vacated and set aside."
On January 27, 2021, Khera filed a motion to compel discovery, seeking, in relevant part, documents related to the execution of the note, deed of trust, and the servicing of the mortgage. Khera argued the documents sought "are highly relevant to the causes of action asserted by [Wilmington] and are likely to yield evidence that [Khera] could use in opposition to the currently pending summary judgment motion filed by [Wilmington]." In particular, Khera sought documents concerning the amount and balance of the loan secured by the deed of trust, which Khera argued was relevant as to the damages sought by Wilmington.
On February 5, 2021, Wilmington filed a second amended petition, seeking (1) declaratory relief that Wilmington's lien interest in the property superior to that of Khera's, and (2) judicial foreclosure of its lien on the property against Hicks and Khera. Wilmington's second amended petition did not include its previously asserted claims for breach of contract against Hicks or to quiet title against Wilmington. The trial court denied Khera's motion to compel discovery on February 8, 2021.
On April 26, 2021, Wilmington filed a second amended hybrid motion for summary judgment as to Khera, arguing that Wilmington was entitled to summary judgment on its declaratory judgment claim and that Khera's claim for declaratory judgment failed because "Khera has no evidence to support its claim that [Wilmington's] deed of trust is unenforceable, no evidence that [Wilmington] has no legal right to the subject property[,] and no evidence to support [Khera's] claim that it holds free and clear fee simple title to the Property." Wilmington also moved for summary judgment on Khera's quantum meruit claim, arguing that: Khera did not have "clean hands," because Khera purchased the property at a foreclosure; quantum meruit was inapplicable to the facts of the case; and Khera provided no evidence of the elements of its quantum meruit claim. Wilmington attached an affidavit of Thomas O'Connell, a Senior Vice President of the mortgage servicer for Wilmington, Planet Home Lending, LLC, testifying to the creation of the note and the deed of trust with Hicks and Hicks' failure to make payments. O'Connell's affidavit further attested that true and correct copies were attached of the payment history on the note; the payoff statement; the note; the deed of trust; a corporate assignment of the deed of trust; the homeowners' association covenants, conditions, restrictions, and easements; and other original documents concerning the note and deed of trust.
On May 10, 2021, Khera filed its own motion for partial summary judgment as to Wilmington's declaratory-judgment claim. Khera argued that Wilmington's second amended petition replaced its quiet-title action with a declaratory-judgment action, and that a declaratory-judgment action was improper because the trespass-to-try-title statute governs the parties' dispute. See id. § 22.001(a) ("A trespass to try title action is the method of determining title to lands, tenements, or other real property."). Khera further argued that Wilmington's declaratory-judgment action was improper because it was duplicative of Wilmington's claim for judicial foreclosure. Wilmington filed a reply to Khera's motion for summary judgment, arguing that Wilmington "is not seeking a foreclosure judgment as to . . . Khera" and that Wilmington's motion "moves solely on its claim for declaratory judgment."
On May 25, 2021, the trial court signed an order, granting Wilmington's second amended motion for summary judgment. The order declared that "Khera's title is subject to [Wilmington's] valid first lien mortgage" and dismissed Khera's counterclaims with prejudice. The order did not award Wilmington any damages. This appeal followed.
In its first issue, Khera argues that the trial court erred when it entered its final judgment because the judgment did not dispose of all claims and parties. Khera argues that Wilmington's second amended motion for summary judgment only addressed Wilmington's claim for declaratory judgment against Khera, but it did not address Hicks or Wilmington's claim for judicial foreclosure.
This court's jurisdiction is established exclusively by constitutional and statutory enactments. See Tex Const. art. V, § 6; Tex. Gov't Code Ann. § 22.220. Unless one of the sources of our authority specifically enables an...
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