Poswalk v. GMAC Mortg., LLC

• Decision Date: 15 June 2012
• Docket Number: Civil Action No. 3:11-CV-0465-D
• Parties: ROBERT POSWALK, et al., Plaintiffs, v. GMAC MORTGAGE, LLC, Defendant.
• Court: U.S. District Court — Northern District of Texas

ROBERT POSWALK, et al., Plaintiffs,

v.GMAC MORTGAGE, LLC, Defendant.

Civil Action No. 3:11-CV-0465-D

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

June 15, 2012

MEMORANDUM OPINIONAND ORDER

In this removed diversity case arising from judicial foreclosure proceedings on the residence of plaintiffs Robert Poswalk ("Robert") and Elizabeth M. Poswalk, defendant GMAC Mortgage, LLC ("GMAC") moves for summary judgment. For the reasons that follow, the court grants the motion.

I

In 2009 plaintiffs obtained a home equity loan on their residence. Robert executed a Texas Home Equity Note ("Note") in the original principal amount of $108,000.¹ Plaintiffs concurrently executed a Texas Home Equity Security Instrument ("Security Instrument") granting a lien on their home. Robert also executed a series of documents, including (1) HUD-1 Settlement Statement, (2) Acknowledgment as To Fair Market Value of HomesteadProperty ("FMV Acknowledgment"), (3) Texas Home Equity Affidavit and Agreement, (4) Voluntary Repayment of Debt ("Voluntary Repayment"), and (5) Texas Client Acknowledgment ("Client Acknowledgment"). In 2010 plaintiffs defaulted under the terms of the note, and GMAC, the servicer of the loan, commenced judicial foreclosure proceedings on their residence.

Plaintiffs filed this suit against GMAC in state court. They allege that, pursuant to Tex. Const. Ann. art. XVI, § 50(a)(6)(Q)(x), GMAC forfeited all principal and interest of the home equity loan because the loan violated certain provisions of the Texas Constitution regarding home equity loans, see Tex. Const. Ann. art. XVI, § 50(a)(6), and that GMAC failed to correct these violations within 60 days of notification. Plaintiffs assert the following three violations: (1) the principal balance of the loan was greater than 80% of the home's fair market value, see § 50(a)(6)(B); (2) the fees for the loan exceeded 3% of the loan amount, see § 50(a)(6)(E), and (3) plaintiffs were required to apply the loan proceeds to repay debt other than debt secured by the homestead, see § 50(a)(6)(Q)(i). Plaintiffs seek a declaratory judgment in accordance with § 50(a)(6)(Q)(x), damages, and attorney's fees.

GMAC moves for summary judgment on all claims. Plaintiffs oppose this motion.²

II

Because GMAC is moving for summary judgment on claims as to which plaintiffs will bear the burden of proof at trial,³ it can obtain summary judgment as to the claim in question by pointing the court to the absence of evidence on any essential element of the claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once it does so, plaintiffs must go beyond their pleadings and designate specific facts demonstrating that there is a genuine issue for trial. See id. at 324; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per curiam). An issue is genuine if the evidence is such that a reasonable jury could return a verdict for plaintiffs on the claim in question. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Plaintiffs' failure to produce proof as to any essential element of the claim renders all other facts regarding that claim immaterial. See Trugreen Landcare, L.L.C. v. Scott, 512 F.Supp.2d 613, 623 (N.D. Tex. 2007) (Fitzwater, J.). Summary judgment for GMAC is mandatory as to the claim in question if plaintiffs fail to meet this burden. Little, 37 F.3d at 1076.⁴

III

Plaintiffs allege that the home equity loan violates § 50(a)(6)(B) because the loan was greater than 80% of the home's fair market value. Section 50(a)(6)(B) provides that a Texas homestead is

protected from forced sale . . . except for . . . an extension of credit that . . . is of a principal amount that when added to the aggregate total of the outstanding principal balances of all other indebtedness secured by valid encumbrances of record against the homestead does not exceed 80 percent of the fair market value of the homestead on the date the extension of credit is made.

Id.; see also Rivera v. Countrywide Home Loans, Inc., 262 S.W.3d 834, 837 (Tex. App. 2008, no pet.) (quoting § 50(a)(6)(B)).

GMAC contends that the amount loaned to plaintiffs did not exceed 80% of the home's fair market value. It posits that, according to an appraisal (the "Forsythe Appraisal") prepared by Forsythe Appraisals, LLC ("Forsythe Appraisals"), the fair market value was $135,000, and, according to the Note and Security Instrument, the loan was authorized for 80% of the fair market value: $108,000. GMAC also maintains that, under § 50(h), it can conclusively rely on the appraisal by Forsythe Appraisals for the fair market value. Section 50(h) states:

[a] lender or assignee for value may conclusively rely on the written acknowledgment as to the fair market value of the homestead property made in accordance with Subsection (a)(6)(Q)(ix) of this section if:

(1) the value acknowledged to is the value estimate in an appraisal or evaluation prepared in accordance with a state or federal requirement applicable to an extension of credit under Subsection (a)(6); and

(2) the lender or assignee does not have actual knowledge at the time of the payment of value or advance of funds by the lender or assignee that the fair market value stated in the written acknowledgment was incorrect.

§ 50(h). GMAC argues that the requirements in § 50(h) are satisfied because (1) the Forsythe Appraisal was prepared in accordance with a state or federal requirement applicable to an extension of credit under § 50(a)(6) and plaintiffs have not produced any evidence otherwise, and (2) the parties signed the FMV Acknowledgment, which recognized that the fair market value of the residence was $135,000 and stated that neither party had any "knowledge, or reason to believe, that the fair market value of the Homestead Property stated in this written acknowledgment is incorrect." D. App. 35.

Plaintiffs do not dispute that Robert signed the FMV Acknowledgment. Instead, they maintain that "[t]here is a disputed issue of material fact regarding the market value of the property" because the tax appraisal by the Dallas Central Appraisal District⁵ (the "DCAD Tax Appraisal") appraised the residence in 2009 as having a fair market value of $122,060.Ps. Br. 3. Plaintiffs also contend that GMAC cannot rely on the Forsythe Appraisal because, under §50(h)(2), GMAC had knowledge of the DCAD Tax Appraisal.

Assuming arguendo that the court can rely on the DCAD Tax Appraisal (which was not submitted in evidence), this argument has been previously rejected. In Penrod v. Bank of New York Mellon, 824 F.Supp.2d 754 (S.D. Tex. 2011), the court held that an appraisal from a public appraisal district was "relevant to valuation for taxation purposes only," and that "[i]t does not establish market value." Id. at 760; see also Hous. Lighting & Power Co. v. Fisher, 559 S.W.2d 682, 686 (Tex. Civ. App. 1977, writ ref'd n.r.e.) ("[I]t is generally held that the value placed upon real property for the purposes of taxation by assessment without participation of the landowner is not evidence of its value for purposes other than taxation.") (citing cases).

Accordingly, the court grants summary judgment dismissing plaintiffs' claim under § 50(a)(6)(B).⁶

IV

Plaintiffs bring a claim under § 50(a)(6)(E), alleging that the fees on the loan exceeded 3% of the loan amount. Section 50(a)(6)(E) provides that a Texas homestead is

protected from forced sale . . . except for. . . an extension of credit that . . . does not require the owner or the owner's spouse to pay, in addition to any interest, fees to any person that are necessary to originate, evaluate, maintain, record, insure, orservice the extension of credit that exceed, in the aggregate, three percent of the original principal amount of the extension of credit.

Id.; see also Penrod, 824 F.Supp.2d at 760 & n. 49 (quoting § 50(a)(6)(E)).

GMAC contends that, according to the HUD-1 Settlement Statement, plaintiffs were charged $3,240 in fees, which is exactly 3% of the $108,000 loan. GMAC posits that the fees included in the 3% fee limit are the following:

+-----------------------------------------------------+
                ¦Fee                                   ¦Amount        ¦
                +--------------------------------------+--------------¦
                ¦Line 803: Appraisal Fee               ¦$350.00       ¦
                +--------------------------------------+--------------¦
                ¦Line 804: Credit Report               ¦$5.57         ¦
                +--------------------------------------+--------------¦
                ¦Line 807: Flood Life of Loan Coverage ¦$5.00         ¦
                +--------------------------------------+--------------¦
                ¦Line 808: Flood Determination Fee     ¦$10.50        ¦
                +--------------------------------------+--------------¦
                ¦Line 809: Underwriting Fee            ¦$115.00       ¦
                +--------------------------------------+--------------¦
                ¦Line 810: Processing Fees             ¦$13.93 $385.25¦
                +--------------------------------------+--------------¦
                ¦Line 888: TSI Appraisal Services      ¦$80.00        ¦
                +--------------------------------------+--------------¦
                ¦Line 1101: Settlement/Closing Fee     ¦$450.00       ¦
                +--------------------------------------+--------------¦
                ¦Line 1108: Title Insurance            ¦$815.00       ¦
                +--------------------------------------+--------------¦
                ¦Line 1111: TX Title Insurance Guaranty¦$5.00         ¦
                +--------------------------------------+--------------¦
                ¦Line 1112: Tax/EPA Endorsements       ¦$315.80       ¦
                +--------------------------------------+--------------¦
                ¦Line 1113: Tax Certification Fee      ¦$41.82        ¦
                +--------------------------------------+--------------¦
                ¦Line 1201b: Recording Fee             ¦$160.00       ¦
                +--------------------------------------+--------------¦
                ¦Line 1301: Survey                     ¦$487.13       ¦
                +--------------------------------------+--------------¦
                ¦Total                                 ¦$3,240.00     ¦
                +-----------------------------------------------------+
                

D. Br. 10; see also D. App. 33. GMAC also asserts...