Leavings v. Mills

• Decision Date: 26 August 2004
• Docket Number: No. 01-03-00047-CV.,01-03-00047-CV.
• Citation: 175 S.W.3d 301
• Parties: Donald Ray LEAVINGS, Appellant, v. Jim MILLS, Individually and d/b/a Multimortgage Bancorp., Appellees.
• Court: Texas Supreme Court

175 S.W.3d 301

Donald Ray LEAVINGS, Appellant, v. Jim MILLS, Individually and d/b/a Multimortgage Bancorp., Appellees.

No. 01-03-00047-CV.

Court of Appeals of Texas, Houston (1st Dist.).

August 26, 2004.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

J.W. Beverly, Houston, TX, for Appellant.

Lester R. Buzbee III, Humble, TX, for Appellees.

Panel consists of Justices TAFT, KEYES, and BLAND.

OPINION ON MOTION FOR REHEARING

EVELYN V. KEYES, Justice.

The court has considered appellees' motion for rehearing in this case and is of the opinion that the motion should be denied. However, we withdraw our opinion and judgment dated April 29, 2004 and substitute those issued today.

Appellant, Donald Ray Leavings (Leavings), challenges the trial court's rendition of summary judgment in favor of appellees, Jim Mills, individually and d/b/a Multimortgage Bancorp. (collectively Mills), in a suit for (1) removal of an encumbrance on property owned by Leavings resulting from Mills' enforcement of a trust deed pursuant to a note granting a security interest in the property; (2) declaratory judgment; (3) deceptive trade practices violations; and (4) usury. In three issues, appellant contends the trial court erred in rendering summary judgment and awarding Mills the right to foreclose on Leavings' property because Mills failed to establish as a matter of law that he was the owner or holder of the note and entitled to recover the amount due on the note. We reverse and remand.

Background

In November 1984, John E. Leavings and his wife Evelyn Fay Leavings, both elderly and now deceased, entered into a home improvement contract with Solar Marketing Corporation. The contract called for the installation of a home improvement solar heating system. On November 15, 1984, the Leavings executed a retail installment contract in which they agreed to pay Solar Marketing $8,495 for the heating system at 16.5% interest per annum, payable in 120 installments of $146.82 each beginning 60 days from the date the Completion Certificate was signed, which was estimated to be December 15, 1984. The record also includes a "Completion Certificate for Property Improvement Loan Work Done or Materials Delivered," dated December 10, 1984, and signed by the Leavings and Solar Marketing, confirming completion of the work.¹

The retail installment contract stated that Solar Marketing would retain a security interest in the tank, pipes, and valves of the solar water heating system and that a mechanic's and materialman's lien would be placed on the Leavings' residence. It also specifically stated, "Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant hereto or with the proceeds hereof." The reverse side of the retail installment contract contains additional terms and conditions. To secure payment of the retail installment contract, the Leavings also executed a "Contract for Labor and Materials and Trust Deed" (the trust deed) on November 15, 1984.

On November 21, 1984, Solar Marketing executed an assignment of the note described in the retail installment contract, "together with all liens existing to secure its payment," to Briercroft Service Corporation.² On December 11, 1984, the day after the Leavings and Solar Marketing executed the completion certificate, Briercroft Service Corporation assigned the note, "together with all liens existing to secure its payment," to Briercroft Savings Association. On December 18, Briercroft Savings Association filed the trust deed and a document reflecting the transfers of the note and the trust deed from Solar Marketing to Briercroft Service Corporation and from Briercroft Service Corporation to Briercroft Savings Association in the Official Records of Fort Bend County at volume 1577, pages 372 and 373.

In 1987, after repeated problems with the heating system, the Leavings ceased making payments on their note. In October 1987, they received a letter from a law firm representing Briercroft Service Corporation, which noted that Briercroft had entered into a settlement agreement with the Texas Attorney General regarding Briercroft's alleged derivative liability resulting from its loan customers' transactions with Solar Marketing Corporation. Briercroft extended the terms of the settlement agreement to the Leavings, but they refused the offer and sent a counteroffer to Briercroft. Briercroft ignored the counteroffer, and the Leavings did not further pursue it.

In March 1989, the Leavings received a letter from Briercroft Service Corporation advising them that their note was in default, demanding past due payments and interest, and threatening to foreclose on their home. The Leavings' attorney responded, and Briercroft did not further pursue its demand at that time.

In May 1997 (after Mr. Leavings' death), Evelyn Fay Leavings received a letter from "Trustees of Texas," signed by James C. Mills as "substitute trustee," claiming that the Leavings' note had fully matured, demanding payment in the amount of $21,196, and threatening to foreclose on their home. After receiving the letter, Evelyn Fay Leavings filed suit against Mills as substitute trustee and other substitute trustees to enjoin the threatened foreclosure.³ The trial court granted the temporary injunction on June 6, 1997. In February 1998, Mills filed a counterclaim, seeking an order of possession and foreclosure, and claiming that he was the owner and holder of the note executed by the Leavings, which he had purchased from the receiver of Briercroft Savings Association.

On June 26, 2002, Mills filed a motion for summary judgment that forms the basis of this appeal. In the motion, Mills stated that he was the owner and holder of the Leavings' note, dated November 15, 1984, which was secured by a lien on the Leavings' real property. Mills stated, "The Leavings' obligation was held by the Briercroft Saving and Loan Association [sic] which was eventually taken over by the FSLIC and OTS, who sold the note through the RTC." Mills claimed the note was due in full on February 10, 1995, and the amount due on the note as of June 21, 2002 was $73,572.63.

In support of his motion, Mills attached, as Exhibit 1, his affidavit attesting that the facts stated in his motion for summary judgment were true and correct and attesting that his affidavit exhibits A-F were "true and correct copies of the Retail Installment `Contract'; Contract for Labor and Material and Trust Deed; `Completion Certificate'; and assignments thereof." In his motion, Mills stated that these documents constitute "all signed documents from (builder) [sic] to final owner, JAMES C. MILLS." Mills further attested in his affidavit that the original of each of these documents had been filed with the trial court.

Exhibits A through D to the Mills affidavit include (A) the Leavings' retail installment contract; (B) the trust deed and the 1984 assignments of the Leavings' note and trust deed from Solar Marketing to Briercroft Service Corporation and from Briercroft Service Corporation to Briercroft Savings Association, as filed at volume 1577, pages 372 and 373 of the Official Records of Fort Bend County; (C) the completion certificate; and (D) a "Notice of Right to Cancel the Retail Installment Contract," executed on November 15, 1984.

Exhibit E to Mills' affidavit is a "Transfer and Assignment Agreement" dated October 23, 1995, between Briercroft Service Corporation, as "owner and holder of that certain Loan and the Liens securing the same," and Old Republic Insured Financial Acceptance Corporation. The agreement assigns to Old Republic all of Briercroft Service Corporation's "right, title and interest" in the loan and liens described in an attached exhibit as the Leavings' "National Housing Act Loan Under Title I" and the trust deed recorded at volume 1577, page 372 of the Official Records of Fort Bend County. The transfer and assignment agreement is signed by Jon G. Moyer for Briercroft Service Corporation and states that the assignment is made pursuant to "that certain Loan Sale Agreement dated October 23, 1995," and "pursuant to the terms and conditions of said Loan Sale Agreement." The assignment is marked as filed and recorded in the official records of Fort Bend County on December 14, 1995.

Exhibit 3 to the motion for summary judgment supports Exhibit E to Mills' affidavit. Exhibit 3 is the affidavit of Daniel Bell, Resolution Specialist for the Federal Deposit Insurance Corporation (FDIC) as successor to the Resolution Trust Corporation (RTC). It attests that Jon G. Moyer had full authority to execute "the attached copy of the Transfer and Assignment Agreement recorded in the public real estate records of Fort Bend County, Texas." The Bell affidavit then identifies the October 23, 1995 Loan Sale Agreement as an agreement between Briercroft Service Corporation and the RTC as Receiver for Beacon Federal Savings Association, as sellers, and Old Republic, as purchaser, and states that the Loan Sale Agreement is "permanently recorded with the Resolution Trust Corporation as RTC Master Contract Nos. 37624 (Beacon) & 37625 (Briercroft) and stored as Case # DOSSWF-SA-5615." However, the Loan Sale Agreement is not attached either to Exhibit "E" to Mills' affidavit or to Bell's affidavit.⁴

Exhibit "F" to Mills' summary judgment affidavit is an assignment of the trust deed from Old Republic to Multimortgage Bancorp. dated December 6, 1996. There is no assignment from Multimortgage Bancorp to Mills; but Mills testifies in his affidavit, "I am the owner of Multimortgage Bancorp."; he avers in his motion for summary judgment that Exhibit 2 to his motion, the affidavit of JoAllyn Comstock, the records keeper of Old Republic, "attest[s] to sale and assignment" of the Leavings' note to him. However, no transfer of the note to Mills or to Multimortgage Bancorp. is referenced in the...