Trimble v. Fed. Nat'l Mortg. Ass'n

• Decision Date: 20 December 2016
• Docket Number: NO. 01–15–00921–CV,01–15–00921–CV
• Parties: Mark TRIMBLE, individually and as assignee for I.B. and Mildred Henderson, Appellant v. FEDERAL NATIONAL MORTGAGE ASSOCIATION, Appellee
• Court: Texas Court of Appeals

516 S.W.3d 24

Mark TRIMBLE, individually and as assignee for I.B. and Mildred Henderson, Appellant

v.FEDERAL NATIONAL MORTGAGE ASSOCIATION, Appellee

NO. 01–15–00921–CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued December 20, 2016

Rehearing Overruled April 4, 2017

Mark Trimble, League City, TX, for Appellant.

Thomas M. Hanson, Adam R. Nunnallee, Dykema Cox Smith, Dallas, TX, for Appellee.

Panel consists of Justices Jennings, Keyes, and Brown.

OPINION

Harvey Brown, Justice

The Federal National Mortgage Association (Fannie Mae) purchased real property at a foreclosure sale after the original owners of the property, I.B. and Mildred Henderson, defaulted on their mortgage. After the Hendersons refused to vacate the property, Fannie Mae filed a forcible detainer action to remove them from the property. The trial court issued an order granting summary judgment for Fannie Mae and granting Fannie Mae a writ of possession of the property. Mark Trimble, to whom the Hendersons had assigned their rights in the property, appeals that order. We affirm.

Background

The Hendersons owned a home located at 1608 Alaska Avenue. The Hendersons took out a mortgage, secured by the home, with Financial Freedom Senior Funding Corporation, which assigned its rights to OneWest. The Hendersons defaulted on that mortgage.

At least four lawsuits resulted from the Hendersons' default. In the first, OneWest filed an expedited foreclosure proceeding under Texas Rule of Civil Procedure 736, in April 2014, in the 56th District Court. The trial court issued an order to "proceed with expedited foreclosure." One month later, Trimble and the Hendersons executed a "Caretaker Agreement" in which the Hendersons granted Trimble "a license to occupy, maintain, and manage the [Hendersons' home] rent free."

The Hendersons filed a second lawsuit in June 2014, also in the 56th District Court, for damages and declaratory relief, arguing that OneWest failed to obtain a proper court order for the foreclosure sale. The Hendersons subsequently nonsuited that case without prejudice in August 2014. The Hendersons later attempted to withdraw that nonsuit, which the trial court denied; that order is the subject of a separate appeal in this Court.¹

After the Hendersons nonsuited the second lawsuit, OneWest filed a notice of foreclosure sale and sold the property to Fannie Mae in October 2014. The Hendersons' mortgage with OneWest provided that if the property were sold at a foreclosure sale, the Hendersons "shall immediately surrender possession of the Property to the purchaser at the sale." And if not, they would become "tenants at sufferance and may be removed by writ of possession."

One month after the foreclosure sale, Fannie Mae gave notice to the Hendersons to surrender possession of the property. Fannie Mae mailed this notice both by (1) certified mail, return receipt requested and (2) first-class mail. Both notices were addressed to "Mildred Henderson, I.B. Henderson And/Or All Occupants." The Hendersons did not surrender possession, and Fannie Mae filed the third lawsuit: a forcible detainer action to evict the Hendersons from the property, in justice court. The justice court issued an order to evict the Hendersons in April 2015.

In May 2015, about six months after Fannie Mae mailed notice to surrender possession and after the justice court had ordered eviction, the Hendersons assigned all of their rights against Fannie Mae and OneWest to Trimble. The same day, Trimble and the Hendersons initiated a fourth lawsuit, a challenge to title naming OneWest, Fannie Mae, and the Hendersons' former law firm as defendants, in the 10th District Court.²

Meanwhile, litigation in the third lawsuit—the one giving rise to this appeal—continued. Trimble appealed the justice court's eviction order in the third lawsuit for de novo review in the County Court. Fannie Mae filed a summary-judgment motion in that appeal, which the County Court granted, dismissing Trimble's lawsuit. Trimble appeals the County Court's order granting Fannie Mae's summary-judgment motion.

Jurisdiction

Trimble, in his first issue, argues that "[t]he record in the foreclosure proceeding"—the second lawsuit, which is not before us—"shows a complete lack of notice to the Hendersons which renders the foreclosure judgment void and the foreclosure sale void." Because Trimble contends that the foreclosure sale was void, he argues that the subject of the second lawsuit, which he describes as an "intertwined title dispute," "prevents the justice court and the county court from having jurisdiction to decide possession of real property."

A. Standard of review and relevant law

Whether a trial court has subject-matter jurisdiction is a question of law, which we review de novo. Hearts Bluff Game Ranch, Inc. v. State , 381 S.W.3d 468, 476 (Tex. 2012). "If the trial court lacks subject matter jurisdiction, the appellate court can make no order other than reversing the judgment of the court below and dismissing the cause." City of Garland v. Louton , 691 S.W.2d 603, 605 (Tex. 1985).

There are at least two rights at issue when a mortgagee defaults on his financial obligations: a right to title to the property and a right to possession. A justice court has jurisdiction to determine the right of possession through a forcible-detainer action, but the forcible-detainer action cannot "resolve any questions of title beyond the immediate right to possession." Black v. Washington Mut. Bank , 318 S.W.3d 414, 417 (Tex. App.–Houston [1st Dist.] 2010, pet. dism'd w.o.j.). The "existence of a title dispute" does not deprive a justice court of jurisdiction over the forcible-detainer action; "it is only deprived of jurisdiction if the right to immediate possession necessarily requires the resolution of a title dispute." Id. The justice court's determination "of possession in a forcible detainer action is a determination only of the right to immediate possession of the premises, and does not determine the ultimate rights of the parties to any other issue in controversy relating to the realty in question." Id. ; see Wells Fargo Bank, N.A. v. Ezell , 410 S.W.3d 919, 921 (Tex. App.–El Paso 2013, no pet.) ("[T]he only issue in a forcible detainer action is the right to actual possession; and the merits of the title shall not be adjudicated.").

Because a forcible-detainer action's purpose is not to establish title, a plaintiff bringing a forcible-detainer action "is not required to prove title, but is only required to show sufficient evidence of ownership to demonstrate a superior right to immediate possession ." Black , 318 S.W.3d at 417 (emphasis added). When there is a landlord-tenant relationship between the purchaser at foreclosure and the current possessor of the property, such a relationship "provides a basis for the trial court to determine the right to immediate possession, even if the possessor questions the validity of a foreclosure sale and the quality of the buyer's title." Ezell , 410 S.W.3d at 921.

The validity of the foreclosure sale can be challenged in an adjudication of title regardless of the resolution of the forcible-detainer action; parties "have the right to sue in the district court to determine whether the trustee's deed should be cancelled, independent of the award of possession of the premises in the forcible detainer action." Black , 318 S.W.3d at 417 (citation, italics, and internal brackets omitted) (quoting Rice v. Pinney , 51 S.W.3d 705, 712 (Tex. App.–Dallas 2001, no pet.) ); see Merit Mgmt. Partners I, L.P. v. Noelke , 266 S.W.3d 637, 647 (Tex. App.–Austin 2008, no pet.) (district courts "have exclusive jurisdiction over cases in which a judicial determination of a title dispute between the parties is necessary to render the judgment ....").

Because the borrower can still challenge the foreclosure in an adjudication of title, the purchaser at foreclosure who brings a forcible-detainer action must only show sufficient evidence of ownership to demonstrate a superior right to immediate possession "by establishing that: (1) it has a landlord-tenant relationship with the borrower; (2) it purchased the property at foreclosure; (3) it gave proper notice to the occupants of the property to vacate; and (4) the occupants refused to vacate the premises." Ezell , 410 S.W.3d at 921–22. This burden can be satisfied even when "the possessor questions the validity of a foreclosure sale ...." Id. at 921.

It is the first and third of these four elements of a forcible-detainer action that Trimble challenges in this appeal.

B. Whether there is a landlord-tenant relationship between Fannie Mae and the borrowers

A provision in the borrower's mortgage creating a landlord-tenant relationship after a foreclosure sale satisfies the first element to give the purchasing bank a superior right to immediate possession, even if the borrower is simultaneously challenging the validity of the foreclosure sale. For example, in Wells Fargo Bank v. Ezell , the possessor testified that he filed a wrongful-foreclosure lawsuit against the bank but "[w]hen juxtaposed with the uncontroverted evidence that [the bank] had a landlord tenant relationship with the [borrower] and thus a superior right to immediate possession of the premises, [the borrower's] testimony [was] insufficient to show that the county court lacked jurisdiction to award possession of the premises to [the bank]." 410 S.W.3d at 922. The possessor, nonetheless, retained "the right to pursue a wrongful foreclosure action in district court even if possession were awarded to" the bank. Id.

Similarly, in Black v. Washington Mutual Bank , the deed between the bank and the original owner "expressly create[d] a landlord and tenant-at-sufferance relationship" if the property were sold at a foreclosure sale. 318 S.W.3d at 418. The justice court "had evidence before it, including the deed of trust, the substitute trustee's foreclosure sale deed, and related documents establishing default on the...