Livingston v. U.S. Bank N.A.
| Decision Date | 02 April 2020 |
| Docket Number | No. 02-19-00185-CV,02-19-00185-CV |
| Parties | TIMOTHY LIVINGSTON AND LORI LIVINGSTON, Appellants v. U.S. BANK NATIONAL ASSOCIATION, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 271st District Court Wise County, Texas
Before Kerr, Birdwell, and Womack, JJ.
This appeal arises out of a home-equity loan dispute involving Appellants Timothy Livingston and Lori Livingston and Appellee U.S. Bank National Association. In two issues, Appellants challenge the trial court's order denying their motion for summary judgment on U.S. Bank's judicial foreclosure claim. Because the trial court properly denied Appellants' motion for summary judgment based on res judicata as well as fact questions in Appellants' summary judgment evidence, we affirm.
On October 23, 2006, Appellants executed a Texas Home Equity Note, which governed the terms of Appellants' obligation to repay a $320,000 home-equity loan to National City Mortgage, a division of National City Bank, at the rate of $2,075.52 in monthly installments, beginning December 1, 2006, and continuing each month thereafter until paid or until November 1, 2036, at which time the Note will mature. On the same day, Appellants executed a Texas Home Equity Security Instrument (Security Instrument or Deed of Trust), which granted National City a lien on the property. The Deed of Trust gave National City the right to foreclose on the property in the event of Appellants' default on the payments under the Note.
PNC Bank, N.A. is the successor by merger to National City. PNC later assigned the Deed of Trust to U.S. Bank. PNC remained the mortgage servicer of the loan since the assignment. U.S. Bank is the owner and holder of the Note.
Beginning in December 2009, Appellants ceased to make their monthly payment on the Note. As a result of Appellants' default, U.S. Bank elected to accelerate the entire debt. As of July 6, 2016, Appellants were due and owing for the December 2009 Note payment and all subsequent months, and as of July 14, 2016, Appellants owed at least $467,342.32, which consisted of unpaid principal, interest, accrued late charges, miscellaneous fees and costs, and unpaid escrow balance.
This suit is the second lawsuit challenging the right of U.S. Bank to foreclose. In the first lawsuit, Appellants filed suit in the district court of Wise County, Texas, seeking declaratory relief and alleging the failure "to provide [Appellants] with documents at closing that provided all blanks filled in as required by the Texas Constitution Section 50(a)(6)(Q)(iii)." After removal to federal court, PNC filed a motion to dismiss Appellants' claim for declaratory relief that PNC had "failed to provide [Appellants] with documents at closing that provided all blanks filled in as required by the Texas Constitution Section 50(a)(6)(Q)(iii)." The federal court granted the motion to dismiss because "[Appellants'] claim under the Texas constitution is barred by the statute of limitations." The order dismissing the claim also stated that
This lawsuit was filed in May 2014 by U.S. Bank seeking a judicial foreclosure of the property pursuant to Texas Rule of Civil Procedure 735. See Tex. R. Civ. P. 735. Appellants filed an answer, which included a general denial, affirmative defenses, and counterclaims. One of the affirmative defenses alleged that U.S. Bank had "failed to provide [Appellants] with documents at closing that provided all blanks filled in as required by the Texas Constitution Section 50(a)(6)(Q)(iii) . . . mak[ing] the lien void ab initio."
Thereafter, U.S. Bank filed a traditional summary judgment motion against Appellants' counterclaims, alleging that (1) the statute of limitations does not bar U.S. Bank's right to foreclosure, (2) Appellants' counterclaims are barred by res judicata, (3) any claims premised upon the loan's compliance with the provisions in the Texas Constitution applicable to home equity loans are barred by the statute of limitations, (4) any oral statements allegedly made to Appellants instructing them to stop making their loan payments are barred by the statute of frauds, (5) Appellants' intentional misrepresentation claim fails as a matter of law, and (6) Appellants' claims under the Texas Deceptive Trade Practices Act fail as a matter of law. Appellants responded to the motion. The trial court granted U.S. Bank's motion for summary judgment on Appellants' counterclaims.
U.S. Bank then amended its petition for judicial foreclosure to add claims for equitable and contractual subrogation. Appellants filed their motion for summary judgment against the claim for judicial foreclosure, asserting that the lien "is void as the loan failed to comply with the requirements of the Texas Constitution and [U.S. Bank] failed to timely cure the defect once it was notified as required." Several months later, U.S. Bank filed a traditional motion for summary judgment asserting that it was entitled to an "equitable lien under the doctrine of equitable subrogation." The trial court granted U.S. Bank's motion for summary judgment and denied Appellants' motion for summary judgment, stating that it "is barred by res judicata."
Thereafter, U.S. Bank filed a motion for summary judgment on its claim for judicial foreclosure. The trial court granted U.S. Bank's motion for summary judgment and ordered foreclosure. This appeal followed.
In their brief, Appellants raise two issues, both complaining of the trial court's denial of their motion for summary judgment against U.S. Bank's claim for judicial foreclosure. First, they state that the trial court erred by denying their motion for summary judgment "by virtue of res judicata as [Appellee] elected not to pursue judicial foreclosure in any litigation prior to the instant case and was obligated to substantiate [that] the lien being asserted was valid and capable of enforcement under Texas law." Second, they assert that the trial court erred by denying the motion for summary judgment "as the home equity lien being claimed was in violation of theTexas Constitution and was not cured within the prescribed time limits." Neither of the issues complain of the trial court's granting of U.S. Bank's motions for summary judgment.
We review a summary judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). We consider the evidence presented in the light most favorable to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and disregarding evidence contrary to the nonmovant unless reasonable jurors could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every reasonable inference and resolve any doubts in the nonmovant's favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A defendant is entitled to summary judgment on an affirmative defense if the defendant conclusively proves all elements of that defense. Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 508-09 (Tex. 2010); see Tex. R. Civ. P. 166a(b), (c). To accomplish this, the defendant must present summary judgment evidence that conclusively establishes each element of the affirmative defense. See Chau v. Riddle, 254 S.W.3d 453, 455 (Tex. 2008).
In their motion for summary judgment against U.S. Bank's claim for judicial foreclosure, Appellants alleged that U.S. Bank's lien was void "as the loan failed to comply with the requirements of the Texas Constitution." Specifically, theircomplaint is that the Deed of Trust signed by them omitted the exhibit containing the legal description and that a deed of trust "was recorded with an exhibit that described 10 acres of land owned by [Appellants] when it should have included only 1 acre." They also contend that they had notified U.S. Bank multiple times regarding the issue and had demanded that U.S. Bank cure the "defect." According to Appellants, U.S. Bank "sent an offer to cure only the defect regarding the property description being 10 acres while declining any of the other concerns of [Appellants.]" These facts, Appellants contend, violate Texas Constitution Article XVI, Section 50(a)(6)(Q)(iii),1 which states that a lien on a homestead can attach only if it is made on the condition that "the owner of the homestead not sign any instrument in which blanks related to substantive terms of agreement are left to be filled in."
This is the same argument previously raised by Appellants in their first lawsuit and disposed of by res judicata. In both their petition in the first lawsuit and their answer in the second lawsuit, Appellants state, "A review of the closing documents revealed that [the] legal description attached to the recorded deed of trust was notincluded with the copies received by [Appellants] on October 23, 2006." In addition, Appellants allege in both documents that U.S. Bank had "failed to provide [Appellants] with documents at closing that provided all blanks filled in as required by the Texas Constitution Section 50(a)(6)(Q)(iii)."
Appellants contend that res judicata does not apply because U.S. Bank did not pursue judicial foreclosure in the first lawsuit. However, res judicata does not require it.
Appellants and U.S. Bank both agree that the affirmative defense of res judicata has three elements. See Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996). "The party relying on the affirmative defense of res judicata must prove (1) a prior final determination on the merits by a court of competent...
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