Sanders v. Shelton
| Decision Date | 29 May 1998 |
| Docket Number | No. 03-97-00022-CV,03-97-00022-CV |
| Citation | 970 S.W.2d 721 |
| Parties | John Dee SANDERS and Jeff Fisher, Appellants v. Zellena P. SHELTON; Leo E. Foust, Trustee; and W.G. Tingley, Jr., Substitute Trustee, Appellees |
| Court | Texas Court of Appeals |
Jo Ann Merica, Phillips and Merica, P.C., Austin, for Appellants.
Kristin K. Proctor, Law Offices of Edwin J. (Ted) Terry, Austin, for Leo E. Foust, Trustee.
William F. Turman, Austin, for Zellena Shelton & W.G. Tingley, Substitute Trustee.
Before POWERS, ABOUSSIE and B.A. SMITH, JJ.
Zellena P. Shelton, Leo E. Foust, and W.G. Tingley, Jr., recovered summary judgment that John Dee Sanders and Jeff Fisher take nothing on certain of their causes of action 1 arising from a sale of real property by a trustee acting under a power of sale given in a deed of trust. Sanders and Fisher appeal. We will affirm the summary judgment.
Donald Shelton executed and delivered a deed of trust to secure his $9000 debt to his former wife Zellena Shelton. The deed of trust describes certain real property belonging to Donald Shelton, designates Leo E. Foust trustee, and requires that the trustee "shall give notice of [any] foreclosure sale as provided by the Texas Property Code as then amended." Donald Shelton defaulted on his obligation. W.G. Tingley, a substitute trustee, gave notice that he would sell the property at the Travis County Courthouse "between the hours of ten o'clock a.m. and four o'clock p.m. on the first Tuesday in January next."
Just before ten o'clock a.m. on the day of the sale, John Sanders and Jeff Fisher purchased the property from Donald Shelton for $1000 and received Shelton's conveyance of the property purportedly "free and clear of any mortgage liens."
In the summary judgment documents, Sanders and Fisher swore they (and others) arrived at the courthouse by ten o'clock a.m. on the day of the trustee's sale, remained there until four o'clock p.m., and were never able to locate the sale. The summary-judgment evidence indicates that Tingley sold the property on the east steps of the courthouse at 10:58 a.m. on January 7, 1992 to Zellena Shelton for $9000.
Sanders and Fisher sued Zellena Shelton, Leo E. Foust, and W.G. Tingley, Jr., alleging that the trustee's sale was invalid for various reasons. 2 Sanders contended, among other things, that the trustee violated terms of the deed of trust, that appellees conspired to prevent them from bidding at the sale, that appellees intentionally chilled bidding at the sale, and that a grossly inadequate sales price coupled with irregularities at the sale made the sale voidable. Sanders requested compensatory damages and asked the court to set aside the sale. Shelton denied the allegations and filed a motion for summary judgment requesting that Sanders take nothing by his lawsuit. Sanders then filed a cross-motion for summary judgment, requesting in the motion that the court set aside the foreclosure sale and declare Sanders and Fisher the owners of the property.
The trial court rendered partial summary judgment in favor of Shelton with regard to these two particular claims by Sanders: (1) that the trustee's sale should be set aside because the trustee's notice of sale did not comply with the requirements of the deed of trust and underlying state law; and (2) that the sale was voidable because irregularities in the sale contributed to a grossly inadequate Sanders brings two points of error. In his first point of error, he contends the trial court erred by granting Shelton's summary judgment because (1) the trustee's notice of sale did not comply with the terms of the deed of trust and Texas Property Code section 51.002, rendering the sale fatally defective and void, see Slaughter v. Qualls, 139 Tex. 340, 162 S.W.2d 671, 674-75 (1942) (); Durkay v. Madco Oil Co., 862 S.W.2d 14, 17 (Tex.App.--Corpus Christi 1993, writ denied); and (2) Shelton failed to negate Sanders's contention that irregularities at the sale contributed to a grossly inadequate sales price. See American Sav. & Loan Ass'n v. Musick, 531 S.W.2d 581, 587 (Tex.1975); Pentad Joint Venture v. First Nat'l Bank, 797 S.W.2d 92, 96 (Tex.App.--Austin 1990, writ denied) ().
sales price. The remaining claims were severed making this a final judgment from which Sanders appeals.
In his second point of error, Sanders contends the trial court erroneously denied his cross-motion for summary judgment because he established as a matter of law that the sale should be set aside.
The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that she is entitled to judgment as a matter of law. In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true. Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in his favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985).
Texas law recognizes that a mortgagee is under a duty to avoid affirmatively deterring third party bids by acts or statements made before or during the foreclosure sale, but is under no duty to take affirmative action, beyond that required by statute or deed of trust, to secure a fair sale. See Pentad, 797 S.W.2d at 96-97 ().
Before 1889, a trustee's sale under a power of sale given in a deed of trust were apparently not regulated save by provisions in the instrument itself. In that year, the legislature acted to regulate such sales in several particulars. One requirement was that the mortgaged property be sold, in the county where the property was located, "between the hours of 10 o'clock a.m. and 4 o'clock p.m. of the first Tuesday in any month." The second requirement was that the trustee give advance notice of the "time and place" of the proposed sale, as had been previously required for judicial sales. Act approved March 21, 1889, ch. 118, Tex. Gen. Laws 1889, 1171; Tex.Rev.Civ. Stat. Ann. arts. 2303, 2309 (West 1979).
The Texas Property Code was amended in 1988 to add new requirements as indicated by the italicized language below:
(a) A sale of real property under a power of sale conferred by a deed of trust ... must be a public sale at auction held between 10 a.m. and 4 p.m. of the first Tuesday of a month.
(b) Notice of the sale, which must include a statement of the earliest time at which the sale will occur, must be given at least 21 days before the date of the sale.
(c) The sale must begin at the time stated in the notice of sale or not later than three hours after that time.
Act of May 15, 1987, 70th Leg., R.S., ch. 540, § 1, 1987 Tex. Gen. Laws 2174, 2174 (codified at Tex. Prop.Code Ann. § 51.002 (West 1995) (emphasis added)).
In the present case, the trustee's notice stated that this sale would occur "between the hours of ten o'clock a.m. and four o'clock p.m." We are asked to decide if the trustee Appellants supplied legislative history suggesting that the intent of the legislature was to facilitate prospective bidders' ease of access to foreclosure sales. The amendments accomplished this by shortening from six hours to three hours the "window" during which a potential sale may occur. No longer must a buyer stake out the courthouse steps for six hours to locate a foreclosure sale. Although all sales must still occur sometime between ten o'clock a.m. and four o'clock p.m., the new three-hour window means that ten o'clock may not always be the earliest hour at which a sale may occur. All sales must begin not later than three hours after the earliest time stated in the notice. Some might begin at eleven o'clock a.m., others at noon and still others at one o'clock p.m. The amendment provides that the notice of sale shall state the earliest time at which the sale will occur, so a prospective buyer knows when to arrive. What the amendment fails to do is to require notice be given of the new three-hour window.
sufficiently identified the time of the proposed foreclosure sale under the amended Property Code.
Before the 1988 amendments, the trustee's notice sufficiently identified the "time" of the proposed sale merely by stating that the sale would take place on a particular Tuesday "between ten o'clock a.m. and four o'clock p.m.," the statutory period of time during which the sale might lawfully take place; and "[i]t was not necessary that the trustee's notice of sale specify an exact hour when the sale would be held." Mabry v. Abbott, 471 S.W.2d 442, 445 (Tex.Civ.App.--Waco 1971, writ ref'd n.r.e.).
Sanders asserts more is required after the 1988 amendments to the Texas Property Code. Sanders and the dissent interpret section 51.002(b) as amended to require a verbatim statement that a designated hour is "the earliest time this sale will occur." Although the sufficiency of a foreclosure notice is frequently litigated, no court has addressed the change in notice, if any, effected by the 1988 amendments to section 51.002(b) & (c).
We decline to read the statute as literally as the dissent. The notice given here makes it perfectly clear that the sale will not occur before 10 o'clock a.m. No more is required. Magical language need not be inserted to accomplish the amendment's purpose of informing the public of the earliest hour the sale will begin. This does not undermine the change effected by the 1988 amendment, which now requires the sale to occur within three...
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