U.S. v. Johnson

• Decision Date: 02 December 1998
• Docket Number: No. 98-50003,98-50003
• Citation: 160 F.3d 1061
• Parties: UNITED STATES of America, Plaintiff, v. Ruben H. JOHNSON, et al., Defendants. PROPERTY TRADING INCORPORATED, Defendant-Cross Defendant-Appellee, v. J. HIRAM MOORE, LIMITED, A Texas Limited Partnership, Defendant-Cross Plaintiff-Appellant, Longley & Maxwell, LLP, Defendant-Cross Plaintiff-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1061

160 F.3d 1061

UNITED STATES of America, Plaintiff, v. Ruben H. JOHNSON, et al., Defendants.

PROPERTY TRADING INCORPORATED, Defendant-Cross Defendant-Appellee, v. J. HIRAM MOORE, LIMITED, A Texas Limited Partnership, Defendant-Cross Plaintiff-Appellant, Longley & Maxwell, LLP, Defendant-Cross Plaintiff-Appellant.

No. 98-50003.

United States Court of Appeals, Fifth Circuit.

Dec. 2, 1998.

Rehearing Denied Dec. 30, 1998.

Travis R. Phillips, Brandon W. Beasley, Phillips & Mercica, Austin, TX, for Property Trading Inc.

Robert W. Swanson, von Kreisler & Swanson, Joanalys B. Smith, Austin, TX, for Defendants-Cross Plaintiffs-Appellants.

Appeal from the United States District Court for the Western District of Texas.

Before KING, GARWOOD and HIGGINBOTHAM, Circuit Judges.

KING, Circuit Judge:

Defendants-cross plaintiffs-appellants J. Hiram Moore, Limited, and Longley & Maxwell, L.L.P., appeal the district court's denial of their motion for summary judgment and grant of defendant-cross defendant-appellee Property Trading, Inc.'s motion for summary judgment. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

The facts of this case are uncontested. In 1960, Ruben Johnson (Johnson) purchased a home in Austin, Travis County, Texas (the Property). Since that date, Johnson continuously has claimed the Property as his homestead and has resided in it except during a period of incarceration for a 1989 criminal conviction. In 1986, Davis & Davis, P.C. (Davis) obtained a judgment against Johnson and on December 24, 1986 recorded the abstract of judgment in Travis County. Davis assigned its interest in the judgment to Longley & Maxwell, L.L.P. (Longley), and Longley and J. Hiram Moore, Limited (Moore) now own the judgment.

On September 23, 1988, Johnson granted the Quadrillion Corporation an option to purchase the Property. That same day, Quadrillion assigned the option to Property Trading, Inc. (PTI). On August 3, 1989, PTI exercised the option and obtained a one-half undivided interest in the Property via a general warranty deed. PTI did not record the deed until October 28, 1992.

In 1995, the United States filed suit in federal district court for the Western District of Texas to obtain a court order allowing it to enforce an unsatisfied restitution lien, obtained as part of Johnson's 1989 conviction and sentence, by foreclosing on the Property. The United States named as defendants Johnson, PTI, Longley, Moore, and others. In 1997, the district court granted the United States's motion to dismiss all its causes of action. The parties remaining in the case are appellants Longley and Moore and appellee PTI. Longley and Moore and PTI each claims an interest in the portion of the Property that Johnson sold to PTI. The issues remaining in the case concern only PTI's undivided one-half interest in the Property and not Johnson's ownership of the remainder. Of course, Texas law determines the parties' interests in the Property.

Longley and Moore filed a motion for partial summary judgment, and PTI filed a countermotion based on essentially the same facts. Longley and Moore alleged that under Texas property law, their judgment lien against Johnson attached to the undivided one-half interest in the Property conveyed to PTI during the period between August 3, 1989, when Johnson sold the one-half interest to PTI, and October 29, 1992, when PTI recorded its deed. PTI responded that Longley and Moore's lien never attached to the interest it received from Johnson and that its delay in recording the deed was of no consequence.

The motions for summary judgment were presented to a magistrate judge, who entered an interim report and recommendation determining that Longley and Moore's judgment lien did not attach to PTI's undivided one-half interest in the Property. Longley and Moore objected to the interim report. The district court, however, entered an interlocutory order approving and accepting the report, denying Longley and Moore's motion for summary judgment, and granting PTI's countermotion for summary judgment. On November 20, 1997, the district court entered its final judgment disposing of all issues. Longley and Moore timely appealed.

II. STANDARD OF REVIEW

The standard of review for entry of summary judgment is de novo, see Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998), applying the same standards as the district court, see Lodge Hall Music, Inc. v. Waco Wrangler Club, Inc., 831 F.2d 77, 79 (5th Cir.1987). After consulting applicable law in order to ascertain the material factual issues, we consider the evidence bearing on those issues, viewing the facts and the inferences to be drawn therefrom in the light most favorable to the non-movant. See King v. Chide, 974 F.2d 653, 656 (5th Cir.1992). Summary judgment is properly granted if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." See FED.R.CIV.P. 56(c). We review the district court's determination of state law de novo. See Salve Regina College v. Russell, 499 U.S. 225, 239, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991).

III. DISCUSSION

On appeal, Longley and Moore argue that the district court erred in denying their motion for summary judgment and granting PTI's countermotion for summary judgment. They point out that a recorded judgment gives the judgment holder a lien on all of the debtor's real property in the county where the judgment is recorded. See TEX. PROP.CODE ANN. § 52.001 (West 1995). Of course, such liens normally do not attach to homestead property. See TEX. CONST. art. XVI § 50. Longley and Moore contend, however, that judgment liens do attach to homestead property if the debtor conveys the property to a third party and there is a gap between the time of the conveyance and the recordation of the deed. Their argument depends primarily on the Texas recording statute, TEX. PROP.CODE ANN. § 13.001 (West 1984 & Supp.1998), and Intertex, Inc. v. Kneisley, 837 S.W.2d 136 (Tex.App.--Houston [14th Dist.] 1992, writ denied). The recording statute provides in pertinent part:

A conveyance of real property or an interest in real property or a mortgage or deed of trust is void as to a creditor or to a subsequent purchaser for a valuable consideration without notice unless the instrument has been acknowledged or proved and filed for record as required by law.

TEX. PROP.CODE ANN. § 13.001 (West 1984). ¹ Longley and Moore contend that the term "creditor" encompasses judgment creditors and that Johnson's conveyance of the Property to PTI was therefore void as to them because it was not recorded for over three years, during which time Longley and Moore's lien attached. Although Longley and Moore acknowledge that ordinarily, under Texas law, a grantor can convey his homestead free and clear of preexisting judgment liens, they argue that Intertex, a controlling case, holds that such liens attach if there is a gap period between the time of alienation and the time of recordation of the subsequent purchaser's deed.

As a federal court sitting in a case governed by state substantive law, we consider the holdings of the supreme court of the state that furnishes the substantive law of the decision--here, Texas--to be controlling precedent. See Owen v. United States, 935 F.2d 734, 738 (5th Cir.1991). In the absence of Texas Supreme Court pronouncements, we generally defer to the holdings of lesser state courts unless we are convinced by other evidence that the state law is otherwise. See id. at 738-39. In this case, there is no Texas Supreme Court opinion squarely addressing the effect of a delay in recording the deed to a valid homestead. Nor is there a court of appeals case with a "writ refused" writ history, which has the same precedential value as an opinion of the Texas Supreme Court. ² See TEX.R.APP. P. 56.1(c); '21' Int'l Holdings, Inc. v. Westinghouse Elec. Corp., 856 S.W.2d 479, 483 (Tex.App.--San Antonio 1993, no writ). We therefore look to lower state court decisions, but we do not defer to them if it appears from other evidence that they do not accurately reflect Texas law.

We begin our analysis by noting a few first principles. Under the Texas constitution, judgment liens on homestead property normally are not valid:

The homestead of a family, or of a single adult person, shall be, and is hereby protected from forced sale, for the payment of all debts except for the purchase money thereof, or a part of such purchase money, the taxes due thereon, or for work and material used in constructing improvements thereon.... No mortgage, trust deed, or other lien on the homestead shall ever be valid, except for purchase money therefor, or improvements made thereon....

TEX. CONST. art. XVI § 50. Judgment liens will attach, however, if the homestead ceases to be homestead property, for example if the debtor abandons it. See In re Henderson, 18 F.3d 1305, 1308 (5th Cir.1994); Exocet, Inc. v. Cordes, 815 S.W.2d 350, 351, 355 (Tex.App.--Austin 1991, no writ); Walton v. Stinson, 140 S.W.2d 497, 499 (Tex.Civ.App.--Dallas 1940, writ ref'd). Although alienation also terminates a homestead interest, see Resolution Trust Corp. v. Olivarez, 29 F.3d 201, 206 (5th Cir.1994), a grantee who acquires property that was a homestead at the time of the conveyance takes free and clear of a prior judgment lien. ³ See, e.g., Meyer v. Paxton, 78 Tex. 196, 14 S.W. 568, 568-69 (1890); Black v. Epperson, 40 Tex. 162, 188 (1874); Hoffman v. Love, 494 S.W.2d 591, 594 (Tex.Civ.App.--Dallas 1973, writ ref'd n.r.e.); Englander Co. v. Kennedy, 424 S.W.2d 305, 309 (Tex.Civ.App.--Dallas 1968, writ ref'd n.r.e.); Soper v. Medford, 258 S.W.2d 118, 121 (Tex.Civ.App.--Eastland 1953, no writ); Johnson v. Echols, 21 S.W.2d 382, 384 (Tex.Civ.App.--Eastland 1929, writ ref'd); Howard v....