Long Beach Mortg. Co. v. Evans

• Decision Date: 06 March 2009
• Docket Number: No. 05-07-00435-CV.,05-07-00435-CV.
• Citation: 284 S.W.3d 406
• Parties: LONG BEACH MORTGAGE COMPANY, Appellant, v. Robb EVANS, as Receiver for TLC America, Inc., Appellee.
• Court: Texas Court of Appeals

284 S.W.3d 406

LONG BEACH MORTGAGE COMPANY, Appellant, v. Robb EVANS, as Receiver for TLC America, Inc., Appellee.

No. 05-07-00435-CV.

Court of Appeals of Texas, Dallas.

March 6, 2009.

Rehearing Overruled June 17, 2009.

Randall K. Price, James T. Phillips, and Perry J. Cockerell, Cantey & Hanger, LLP, for Appellant.

Karen Hart, Randall K. Lindley, Bell, Nunnally & Martin, LLP, Dallas, Jeffrey R. Seewald, McGlinchey Stafford, PLLC, Houston, for Appellee.

Before Justices BRIDGES, FRANCIS, and WHITTINGTON.¹

OPINION

Opinion by Justice BRIDGES.

This case involves competing interests in residential property located in Texas. Long Beach Mortgage Company appeals from a summary judgment. In three issues, Long Beach challenges the trial court's grant of Robb Evans's motion for summary judgment, the denial of Long Beach's motion for summary judgment, and the award of attorneys' fees to Evans. We affirm the judgment of the trial court.

Background

In 2000, the Securities and Exchange Commission brought suit in California against TLC America, Inc. and related business entities and individuals for federal securities laws violations with regard to the misuse and diversion of over $28 million in investor funds ("SEC Litigation"). In the SEC Litigation, the California federal court appointed Robb Evans as temporary receiver, giving Evans the "full powers of an equity receiver, including, but not limited to, full power over all funds, assets, collateral, premises ... of TLC." The order also authorized Evans "to have access to and to collect and to take custody ... of all assets ... of TLC" and "to take such action as is necessary and appropriate to preserve ... any assets of TLC." Evans then filed his initial order of appointment and the complaint from the SEC Litigation in the United States District Court for the Northern District of Texas. The court in the SEC Litigation later entered an order appointing Evans as the permanent receiver of TLC America.

After his appointment, Evans brought suit in the United States District Court for the Central District of California against multiple defendants, including Durham Capital Group, Inc. and David Price, the president of Durham, to recover TLC America's property (the "Garro Litigation").² Evans asserted claims of fraud, conversion, negligence and breach of fiduciary duty in the Garro Litigation. Evans also sought the imposition of a constructive trust on property purchased with funds stolen from TLC America.

In the Garro Litigation, Evans alleged that over $2.5 million of TLC America's funds had been wired into a Durham Capital Group, Inc. bank account controlled by David Price and his former wife, Carol Miller Price. During the course of the Garro Litigation, Evans discovered that over $1 million of the funds transferred into the Durham account were diverted into an account separately maintained by Carol Miller Price. Carol Miller Price then used this money to purchase a personal residence in Texas, the Marquette Property, in October 1999. Upon discovering that TLC America's funds had been used to purchase the Marquette Property, Evans filed a notice of lis pendens on July 23, 2002. The notice was recorded in Dallas County, Texas on July 24, 2002.

Also on July 24, 2002, David Price and Carol Miller Price borrowed $400,000 from Long Beach through a home equity loan. A deed of trust on the Marquette Property secured this loan. On August 2, 2002, Long Beach filed its deed of trust in Dallas County, Texas, creating a lien on the Marquette Property. The Prices ultimately defaulted on their loan with Long Beach.

In December 2002, the California federal court in the Garro Litigation found David Price and Durham Capital jointly and severally liable to Evans, as receiver for TLC America, in the amount of $3,505,001.59. The federal court also imposed a constructive trust over the Marquette Property.

After the constructive trust was imposed in the Garro Litigation, Evans petitioned the court in the SEC Litigation for permission to sell the Marquette Property. The court in the SEC Litigation granted Evans permission to sell the Marquette Property "free and clear of all liens and interests therein, with such liens and interests to attach to the net proceeds of sale." The court further ordered that "the sale proceeds shall be held in trust by [Evans] pending resolution of all disputes concerning distribution of the sale proceeds and any claimed interests in the [Marquette Property.]" The court further ordered David Price, Carol Miller Price, Long Beach, and any other third-party claimant to file a claim with the court within sixty days if they intended to assert an interest in the sale proceeds. The court authorized Evans to "perform any and all other acts necessary to effectuate the orderly sale of the [Marquette Property.]"

Long Beach did not file a claim in the SEC Litigation pursuant to the court's order. Long Beach contends that it did not file a claim because it was not served with the order providing the sixty-day deadline to assert a claim to the sale proceeds. Consequently, the California federal court did not resolve Long Beach's lien claim, thereby clouding title to the Marquette Property.

Evans registered the judgment imposing the constructive trust for enforcement in the United States District Court for the Northern District of Texas. In 2004, the federal court for the Northern District of Texas divested the Prices of all title and interest to the Marquette Property and vested full fee simple title to the Marquette Property in Evans.

Evans has filed this lawsuit against Long Beach in state district court to resolve Long Beach and Evans's competing claims (i.e. Evans's lis pendens and Long Beach's deed of trust) to the Marquette Property. The parties filed traditional cross-motions for summary judgment. The trial court granted summary judgment in favor of Evans and denied Long Beach's motion. The court entered a final judgment in favor of Evans, which declares his lis pendens valid and effective with respect to the Marquette Property and superior to Long Beach's deed of trust lien claim. The judgment further declares Long Beach's deed of trust claim invalid and of no force and effect with respect to the Marquette Property and quiets title to the Marquette Property in Evans. The final judgment also authorizes Evans to sell the Marquette Property and awards Evans his attorneys' fees.

The trial court denied Long Beach's motion for new trial and this appeal ensued.

Discussion

Standard of Review

The standards for reviewing a summary judgment are well established. The party moving for summary judgment has the burden of showing no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. See Tex.R. Civ. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.1985). In deciding whether a disputed material fact issue exists, precluding summary judgment, evidence favorable to the non-movant will be taken as true. Nixon, 690 S.W.2d at 548-49. Further, every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor. Id. When both parties move for summary judgment, each party bears the burden of establishing that it is entitled to judgment as a matter of law. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 356 (Tex.2000). We review the summary judgment evidence presented by both parties and determine all questions presented. Id. The reviewing court should render the judgment that the trial court should have rendered, or remand if neither party has met its summary judgment burden. Id.

Issues One And Two

In its first and second issues, Long Beach contends the trial court improperly granted Evans's motion for summary judgment and denied its motion. Within these issues, Long Beach contends: (1) the California federal court and Evans lacked in rem jurisdiction over the Marquette Property; (2) the lis pendens was ineffective because it evidences collateral issues; (3) "the interplay between the local action doctrine and collateral issues" are problematic; (4) the pleadings in the Garro Litigation do not support lis pendens in Texas; and (5) the lis pendens did not provide it with constructive notice.

1. Long Beach's First and Third Arguments—Whether Evans And The California Federal Court Had Jurisdiction

With regard to its first and third arguments, Long Beach contends that the California federal court and Evans lacked in rem jurisdiction over the Marquette Property because Evans failed to file the complaint and order of appointment within ten days as required by 28 U.S.C. § 754. A receiver achieves jurisdiction and control of property in districts other than that of appointment by following the requirements of 28 U.S.C. § 754. See U.S. v. Arizona Fuels Corp., 739 F.2d 455, 460 (9th Cir. 1984). Section 754 provides, in pertinent part, as follows:

A receiver, appointed in any civil action or proceeding involving property, real, personal or mixed, situated in different districts shall, upon giving bond as required by the court, be vested with complete jurisdiction and control of all such property with the right to take possession thereof.

...

Such receiver shall, within ten days after the entry of his order of appointment, file copies of the complaint and such order of appointment in the district court for each district in which the property is located. The failure to file such copies in any district shall divest the receiver of jurisdiction and control over all such property in that district.

28 U.S.C. § 754.

The record before us reflects Evans was appointed temporary receiver in the SEC Litigation by order dated October 4, 2000. This order and the accompanying complaint were filed in the United States District Court for the Northern District of Texas nine days later, on October 13, 2000. The California federal court then appointed Evans as permanent receiver on November 1,...