Myrad Properties v. Lasalle Bank Nat. Ass'n

• Decision Date: 18 December 2009
• Docket Number: No. 08-0444.,08-0444.
• Citation: 300 S.W.3d 746
• Parties: MYRAD PROPERTIES, INC., Petitioner, v. LASALLE BANK NATIONAL ASSOCIATION, as Trustee for the Registered Holders of GMAC Commercial Mortgage Securities, Inc., Commercial Mortgage Pass-Through Certificates, Series 1997-C1, Robin Green, and Melissa Cobb, Respondents.
• Court: Texas Supreme Court

300 S.W.3d 746

MYRAD PROPERTIES, INC., Petitioner, v. LASALLE BANK NATIONAL ASSOCIATION, as Trustee for the Registered Holders of GMAC Commercial Mortgage Securities, Inc., Commercial Mortgage Pass-Through Certificates, Series 1997-C1, Robin Green, and Melissa Cobb, Respondents.

No. 08-0444.

Supreme Court of Texas.

Argued March 31, 2009.

Decided December 18, 2009.

Rehearing Denied February 12, 2010.

Donald R. Taylor, Miguel Sergio Rodriguez, Taylor, Dunham and Burgess, L.L.P., Austin, for Petitioner.

Keith Miles Aurzada, Bryan Cave, LLP, Jay Lloyd Krystinik, Powell Goldstein LLP, Dallas, for Respondents.

William C. Lipsey, Hoelscher Lipsey & Elmore, PC, College Station, for Amici Curiae Bryan College Station Regional Association of Realtors and University Title Company.

Justin MacDonald, Hill Country Homebuilders Assoc., Kerrville, for Amicus Curiae pro se.

W. Barry Kahn, Hettig/Kahn Holdings, Inc., Houston, for Amicus Curiae pro se.

Gary Henley, Home Builders Assoc'n Greater, Austin, Austin, for Amicus Curiae pro se.

James R. Gaines, Texas Landowners Council, Austin, for Amicus Curiae pro se.

Daniel J. Brustkern, Schaeffer & Brustkern, LLP, Austin, for Amicus Curiae Homebuilder's Assoc. Greater Austin.

Ted Hollen, Lago Vista, for Amicus Curiae Texas Landowners Council.

Celia C. Flowers, Flowers Davis, PLLC, for Amicus Curiae Texas Land Title Association.

Justice GREEN delivered the opinion of the Court.

In this foreclosure dispute, we must decide whether a correction deed may convey two properties when an unambiguous deed mistakenly conveyed only one. Because the particular correction deed at issue exceeds the narrow permissible scope of a correction deed, we hold that the correction deed was void and only one property was conveyed. We therefore reverse the judgment of the court of appeals. We then decide whether to rescind the mistaken deed because under the unique circumstances of this case, where the issue of rescission reaches us on cross-motions for summary judgment without factual dispute, we need not remand for further proceedings. Instead, we render judgment and order rescission of the mistaken deed.

I

The undisputed facts show that Myrad Properties, Inc. financed two separate properties in Killeen for $1.05 million. An apartment complex stood on each, the La Casa Apartments on one, the Casa Grande Apartments on the other. Myrad executed a promissory note, which was secured by a deed of trust that covered both properties. LaSalle Bank National Association's predecessor in interest, which held the note as trustee for its investors, recorded the deed of trust. The deed of trust provided that, upon default, LaSalle's predecessor would have the right to sell the property through non-judicial foreclosure. After Myrad defaulted, LaSalle proceeded to foreclose.

A group of substitute trustees was appointed.¹ LaSalle directed them "to foreclose the lien of the Deed of Trust in accordance with its terms and the laws of the State of Texas," and cited to the recorded deed of trust. The substitute trustees posted notice of sale. In various parts, the notice referred both to the note and the recorded deed of trust, including a statement that "Notice is hereby given of Holder's election to proceed against and sell both the real property and any personal property described in the Deed of Trust." However, the notice's property description referred to Exhibit A, the only exhibit, which in turn described only the Casa Grande property.

At the auction, the substitute trustees read only the legal description of the Casa Grande property, while at the same time referring unspecifically to the property described in the deed of trust. LaSalle made the sole bid at the auction, bidding $978,000.00.² After the foreclosure sale, the substitute trustees issued a deed to LaSalle, which LaSalle immediately recorded. The deed, in relevant part, states as follows:

The undersigned Substitute Trustee, in consideration of the foregoing and of the payment of the Purchase Price, by the authority conferred on the undersigned Substitute Trustee by the Deed of Trust, GRANTS, SELLS, and CONVEYS to Grantee, its legal representatives, successors and assigns, the Property, together with, all and singular, the rights, privileges and appurtenances thereto, subject, subordinate and inferior to any senior encumbrances and other exceptions to conveyance and warranty in the Deed of Trust (the `Permitted Exceptions').

"Property" is defined in the substitute trustees' deed as "The real property described in Exhibit A attached hereto and made a part hereof for all purposes, together with all improvements and personal property described in the Deed of Trust" (emphasis in original). Again, Exhibit A described only the Casa Grande property.³

Two days later Myrad filed this action seeking a temporary restraining order to prohibit LaSalle from filing a corrected deed covering the La Casa property. The district court entered the order, but dissolved it after a hearing, whereupon LaSalle recorded a correction deed including a description of both properties. Myrad then brought an action to quiet title and for a declaration that LaSalle owns only the Casa Grande property, while Myrad owns La Casa free from encumbrance and is entitled to any surplus from the sale. Myrad also sought damages for breach of duty, alleging that the substitute trustees "breach[ed their] duties to Myrad by taking acts to file the [correction deed] ... [which] was the proximate cause of damages," and similarly alleging that acts taken to file the correction deed amounted to conspiracy to breach such duties. LaSalle in turn sought a declaration that it now holds title to both properties, or in the alternative, LaSalle and the substitute trustees sought rescission of the conveyance from the substitute trustees to LaSalle. The parties then filed cross-motions for summary judgment on their declaratory claims and LaSalle's claim for rescission. LaSalle's motion also sought summary judgment on Myrad's claims for breach of duty and conspiracy. The trial court granted LaSalle's motion and entered final judgment that Myrad take nothing, declaring that the sale had conveyed title to both properties to LaSalle, and that the correction deed vested title in both properties. The court of appeals affirmed the judgment that LaSalle held title to both properties, affirmed that Myrad's breach of duty and conspiracy claims failed, and remanded on the fact question of whether Myrad is entitled to any surplus from the sale.⁴ 252 S.W.3d 605, 622 (Tex.App.-Austin 2008).

II

Rather than requiring that erroneous deeds be reformed or rescinded by judicial proceedings, we have long allowed agreeable parties to use correction deeds in limited circumstances.⁵ See Doty v. Barnard, 92 Tex. 104, 47 S.W. 712, 713 (1898) (stating that use of a correction deed was proper "to correct the defects and imperfections of the deed above referred to, and had the same effect upon the rights of the parties that a judgment of court would have had"). But the proper use of a correction deed is narrow in scope. See, e.g., Adams v. First Nat'l Bank of Bells/Savoy, 154 S.W.3d 859, 871 (Tex. App.-Dallas 2005, no pet.) ("A correction deed is filed for the sole purpose of correcting some facial imperfection in the title."). For instance, a correction deed may be used to correct a defective description of a single property when a deed recites inaccurate metes and bounds. E.g., Doty, 47 S.W. at 712 (enforcing a deed correcting an improper acreage description). Similarly, a correction deed may be used to correct a defective description of a grantor's capacity. E.g., Humble Oil & Refining Co. v. Mullican, 144 Tex. 609, 192 S.W.2d 770, 771-72 (1946) (enforcing a correction deed stating that a grantor was "community administrator" of an estate under the probate code, not "independent executor" as stated in the original deed). However, using a correction deed to convey an additional, separate parcel of land is beyond the appropriate scope of a correction deed. See Smith v. Liddell, 367 S.W.2d 662, 666 (Tex.1963) (refusing to enforce a correction deed purporting to convey a mineral interest in an additional 71.446-acre tract from a separate survey where the first deed mistakenly conveyed only an interest in a 152.11-acre tract); cf. Sanborn v. Crowdus Bros. & Co., 100 Tex. 605, 102 S.W. 719, 720 (1907) (refusing to render judgment enforcing a corrected quitclaim deed where the mistaken quitclaim deed purported to release and convey additional lots not covered by a vendor's lien); Halbert v. Green, 156 Tex. 223, 293 S.W.2d 848, 852-53 (1956) (rejecting use of a correction deed to change the fractional interest of a mineral estate, or change a mineral interest to a royalty interest).

Preserving the narrow circumstances for acceptable use of a correction deed is important because a proper correction deed may relate back to the date of the deed it corrects. See Doty, 47 S.W. at 714 ("All persons claiming [an interest] ... by conveyance subsequent to the [first, mistaken] deed ... are bound by the recitals contained in the latter [correction] deed, and could acquire no right under the [first, mistaken] deed ... to land not embraced in the [correction] deed. ..."); Humble Oil, 192 S.W.2d at 772-73 (stating that a delay rental deadline related back to the original deed); see also Wilson v. Dearing, Inc., 415 S.W.2d 475, 479 (Tex. Civ.App.-Eastland 1967, no writ) ("The correction instrument related back to and became effective as of the time of the instrument it purported to correct."); Adams, 154 S.W.3d at 871 ("Ordinarily, a correction deed relates back to the date of the document that it purports to express more accurately."). To allow correction deeds to convey additional, separate properties not described in the original deed would introduce unwarranted and unnecessary confusion, distrust, and expense into the Texas real...