Andy A. Atchley and Karri D. Atchley v. Chase Home Finance LLC, and Federal National Mortgage Association

• Court: Court of Appeals of Texas
• Decided: June 20, 2013
• Docket: 02-12-00365-CV
• Status: Published

Opinion

COURT OF APPEALS SECOND DISTRICT OF TEXAS FORT WORTH

NO. 02-12-00365-CV

ANDY A. ATCHLEY AND KARRI D. APPELLANTS ATCHLEY

V.

CHASE HOME FINANCE LLC, AND APPELLEES FEDERAL NATIONAL MORTGAGE ASSOCIATION

----------

FROM THE 153RD DISTRICT COURT OF TARRANT COUNTY

MEMORANDUM OPINION1

I. INTRODUCTION

Appellants Andy A. Atchley and Karri D. Atchley appeal the trial court’s

summary judgment for Appellees Chase Home Finance LLC and Federal

1 See Tex. R. App. P. 47.4. National Mortgage Association (Fannie Mae). We will reverse and remand in

part and affirm as modified.

II. BACKGROUND

In November 2006, in return for a loan, Appellants executed a note

payable to CTX Mortgage Company, LLC in the principal amount of $296,700.00.

To secure repayment of the note, Appellants executed a deed of trust that

identified Mortgage Electronic Registration Systems, Inc. (MERS) as the

beneficiary (as nominee for CTX Mortgage Company).

In June 2009, Appellants were notified of their default under the terms of

the note due to their failure to pay the required monthly installments and that the

note would be accelerated if they did not timely cure the default. In August 2010,

MERS assigned the note and deed of trust to Chase, who notified Appellants

through its attorneys that it had elected to accelerate the balance of the note and

that the property subject to the deed of trust would be sold on September 7,

2010. Fannie Mae purchased the property at a foreclosure sale that day.

Appellants sued Appellees sometime before Fannie Mae could complete

the eviction process, complaining of defects in the notice and foreclosure

processes, alleging violations of the Texas Debt Collection Act (TDCA) and the

Texas Deceptive Trade Practices Act (DTPA), and asserting claims for fraud,

negligent misrepresentation, wrongful foreclosure, and fraudulent lien. Appellees

filed a combined traditional and no-evidence motion for summary judgment as to

2 both Appellants’ claims and Appellees’ counterclaims seeking a declaratory

judgment, a writ of possession, and attorneys’ fees.2 The trial court granted the

motion in its entirety, and this appeal followed.

III. MERITS

In their first issue, Appellants argue that the trial court erred by granting

summary judgment for Appellees because outstanding fact issues exist as to

each of Appellants’ claims. In light of Appellees’ motion, we will apply the no-

evidence summary judgment standard to Appellants’ fraud and negligent

misrepresentation claims and the traditional standard to the remaining claims.

A. No-Evidence Standard

After an adequate time for discovery, the party without the burden of proof

may, without presenting evidence, move for summary judgment on the ground

that there is no evidence to support an essential element of the nonmovant’s

claim or defense. Tex. R. Civ. P. 166a(i). The motion must specifically state the

elements for which there is no evidence. Id.; Timpte Indus., Inc. v. Gish, 286

S.W.3d 306, 310 (Tex. 2009). The trial court must grant the motion unless the

nonmovant produces summary judgment evidence that raises a genuine issue of

2 Appellees had sought a declaration that Fannie Mae is the owner of the property as a result of the foreclosure sale, that Appellees are entitled to pursue eviction proceedings, and that all lis pendens or other encumbrances on the property be dismissed.

3 material fact. See Tex. R. Civ. P. 166a(i) & cmt.; Hamilton v. Wilson, 249 S.W.3d

425, 426 (Tex. 2008).

B. Traditional Motion Standard

Under the traditional standard, the issue on appeal is whether the movant

met the summary judgment burden by establishing that no genuine issue of

material fact exists and that the movant is entitled to judgment as a matter of law.

Tex. R. Civ. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding,

289 S.W.3d 844, 848 (Tex. 2009). Once the defendant produces sufficient

evidence to establish the right to summary judgment, the burden shifts to the

plaintiff to come forward with competent controverting evidence that raises a fact

issue. Van v. Pena, 990 S.W.2d 751, 753 (Tex. 1999). We review a summary

judgment de novo. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex.

2010).

C. Authority-to-Foreclose- and Notice-Based Claims

Appellants’ TDCA, DTPA, wrongful foreclosure, and ―Mortgage

Transaction‖ claims all implicate either Chase’s authority to foreclose on the

property or the pre-foreclosure notices given by Chase to Appellants. Regarding

the former contention, the business and commerce code provides that an

instrument containing a blank endorsement is payable to the bearer and may be

negotiated by transfer of possession alone. See Tex. Bus. & Comm. Code Ann.

§ 3.205(b) (West 2002); see also Robeson v. Mortg. Elec. Registration Sys., Inc.,

4 No. 02-10-00227-CV, 2012 WL 42965, at *4 (Tex. App.—Fort Worth Jan. 5,

2012, pet. denied) (mem. op.). Appellees’ summary judgment evidence

contained a copy of the note, endorsed in blank, and the affidavit of a Chase

mortgage officer who affirmed that Chase was the owner and holder of the note

and had possession of the note. Appellees’ summary judgment evidence also

contained an assignment of the note from MERS to Chase effective July 19,

2010, and signed on August 5, 2010. ―When the assignment is in writing, there

can be no question of the right of the assignee to bring the action in his own

name . . . .‖ Smith v. Clopton, 4 Tex. 109, 114–15 (1849).

Notwithstanding this evidence, Appellants argue that Chase lacked the

authority to foreclose because the 2009 default notice indicated that Fannie Mae

was the mortgagee. But as Appellees point out, this ignores the uncontroverted

summary judgment evidence demonstrating that Chase later had possession of,

and was also assigned, the note. Appellants additionally argue that there is no

proof that Stephen Porter held the office of Assistant Secretary for MERS, such

that the assignment of the note and deed of trust from MERS to Chase was

invalid. But the written assignment contains all of the requirements necessary to

effectuate a legal transfer of the note and deed of trust, and Appellants submitted

no controverting evidence that the assignment was somehow invalid.

Regarding the pre-foreclosure notice to Appellants, the property code

provides that a debtor must be given notice of its default and at least twenty days

5 to cure the default before the notice of sale under section 51.002(b) is given.

Tex. Prop. Code Ann. § 51.002(d) (West Supp. 2012). Thereafter, notice of the

sale must be given by ―serving written notice . . . on each debtor who . . . is

obligated to pay the debt‖ at least twenty-one days before the date of the sale.

Id. § 51.002(b)(3). Appellees’ summary judgment evidence contained both

notices—Appellants were notified in June 2009 that they were in default but

could cure the default, and they were notified on August 5, 2010, that the

foreclosure sale would occur more than twenty-one days later, on September 7,

2010. Karri Atchley confirmed in her affidavit attached to Appellants’ summary

judgment response that she received notice of the foreclosure sale.

Appellants argue that the foreclosure sale notice was invalid because it

was not signed, but they direct us to no provision in the property code that

requires the notice to be executed. Appellants do not argue that they did not

receive notice.

The record thus shows that Appellees established their entitlement to

summary judgment on Appellants’ TDCA, DTPA, wrongful foreclosure, and

―Mortgage Transaction‖ claims but that Appellants failed to respond with any

competent evidence raising a genuine fact issue on those claims. See Tex. R.

Civ. P. 166a(c). We hold that the trial court did not err by granting Appellees

summary judgment on Appellants’ TDCA, DTPA, wrongful foreclosure, and

―Mortgage Transaction‖ claims. We overrule this part of Appellants’ first issue.

6 D. Fraud and Negligent Misrepresentation

Appellees argued in their motion for summary judgment that Appellants

had no evidence that they justifiably relied upon any material or false

representation of Appellees. Indeed, a plaintiff must demonstrate that it actually

and justifiably relied upon a representation to its detriment to recover damages

for both fraud and negligent misrepresentation. See Grant Thornton LLP v.

Prospect High Income Fund, 314 S.W.3d 913, 923 (Tex. 2010); Henry Schein,

Inc. v. Stromboe, 102 S.W.3d 675, 693 (Tex. 2002). Appellants contend that

Karri Atchley’s affidavit ―establishes the explicit representations of Chase to

Appellants that there would be a modification of the loan and that there would be

no foreclosure sale on September 7, 2010‖ and that Appellants ―clearly relied on

those representations made to them by Chase, to their detriment.‖ Karri’s

affidavit states in relevant part as follows:

Octavia Henson talked to Dante Smith on September 3, 2010, and Mr. Smith admitted that we had submitted [a] new application and that they had everything back on August 16, 2010. He said our foreclosure sale would be put on hold. We were excited to think that we would finally get the loan modification done. Ms. Henson told us she recorded the conversation and said to call back on September 8, 2010 to be sure Chase updated our records. We did, and were told the house had been sold at auction on September 7.

We were also working with Glynda Esprada, another counselor at MHA, who said she was going to try to speak with Fannie Mae to try to get the sale rescinded. We tried doing a conference call with her office and Chase, and talked to two different loan specialists and foreclosure department people (Glynda and Ederyn), but neither would allow us to speak with their supervisors.‖

7 Although the affidavit sets out the circumstances and communications

surrounding the purported loan modification, it does not identify any evidence

that Appellants consequently relied to their detriment upon the alleged

representation that the loan modification would proceed. Because Appellants

failed to come forward with any evidence to support an essential element of their

fraud and negligent misrepresentation claims, the trial court did not err by

granting Appellees summary judgment on those claims. See Tex. R. Civ. P.

166a(i). We overrule this part of Appellants’ first issue.

E. Fraudulent Lien

The trial court granted Appellees summary judgment on Appellants’

fraudulent lien claim even though Appellees did not move for summary judgment

on that claim, which appears in Appellants’ first amended petition, which was

filed after Appellees filed their motion for summary judgment. A trial court cannot

grant summary judgment on a ground that was not presented in the motion.

McConnell v. Southside ISD, 858 S.W.2d 337, 341 (Tex. 1993); Roberts v. Sw.

Tex. Methodist Hosp., 811 S.W.2d 141, 146 (Tex. App.—San Antonio 1991, writ

denied) (―When a motion for summary judgment asserts grounds A and B, it

cannot be upheld on grounds C and D, which were not asserted, even if the

summary judgment proof supports them and the responding party did not except

to the motion.‖). We therefore sustain this part of Appellants’ first issue.

8 F. Attorneys’ Fees

Appellees sought an award of $5,000 in attorneys’ fees in conjunction with

their declaratory judgment claim, the merits of which Appellants do not challenge

on appeal. The trial court awarded Appellees $6,000. Appellants argue that the

award was improper because there was a ―clear conflict in evidence regarding

the award of attorney’s fees‖ and because the Appellees’ summary judgment

evidence never requested $6,000.

Appellees’ attorney affirmed in an affidavit included with the summary-

judgment evidence that a reasonable and necessary fee for defending this matter

was $5,000, not $6,000. Appellants argue that their attorney’s affidavit was

sufficient to raise a fact issue as to the amount of attorney’s fees, but the affidavit

merely contends that the Appellees’ evidence is conclusory and that the amount

requested is excessive. ―An affidavit filed by non-movant’s counsel that simply

criticizes the fees sought by the movant as unreasonable without setting forth the

affiant’s qualifications or the basis for his opinion will not be sufficient to defeat

summary judgment.‖ Basin Credit Consultants, Inc. v. Obregon, 2 S.W.3d 372,

373 (Tex. App.—San Antonio 1999, pet. denied). Appellants’ affidavit did not set

forth their attorney’s qualifications or the basis for his opinion as to what a

reasonable fee would be. Appellants therefore submitted no evidence

controverting Appellees’ evidence of attorneys’ fees.

9 We hold that Appellees were entitled to summary judgment on their claim

for attorneys’ fees, but only in the amount of $5,000. See A.N.A. Prince Corp. v.

Herolz, No. 01-94-00450-CV, 1995 WL 477548, at *4–5 (Tex. App.—Houston

[1st Dist.] 1995, no pet.) (reasoning that the trial court may not grant a summary

judgment for more relief than is supported by the summary judgment evidence

and reforming judgment to reflect an award of attorneys’ fees supported by the

evidence). We therefore sustain this part of Appellants’ first issue to the extent

that the trial court awarded Appellees $1,000 too much in attorneys’ fees.

IV. ADEQUATE TIME FOR DISCOVERY

In their second issue, Appellants argue that the trial court erred by granting

summary judgment because they did not have an adequate time to conduct

discovery.

We review a trial court’s determination that there has been an adequate

time for discovery on a case-by-case basis under an abuse of discretion

standard, bearing in mind that a trial court abuses its discretion only when it acts

in an unreasonable manner or when it acts without reference to any guiding rules

or principles. LaRue v. Chief Oil & Gas, LLC, 167 S.W.3d 866, 873 (Tex. App.—

Fort Worth 2005, no pet.); see Downer v. Aquamarine Operators, Inc., 701

S.W.2d 238, 241–42 (Tex. 1985), cert. denied, 476 U.S. 1159 (1986).

In considering whether the trial court permitted an adequate time for

discovery, we consider the following factors: (1) the nature of the case, (2) the

10 nature of the evidence necessary to controvert the no-evidence motion, (3) the

length of time the case was active, (4) the amount of time the no-evidence

motion was on file, (5) whether the movant had requested stricter deadlines for

discovery, (6) the amount of discovery that already had taken place, and

(7) whether the discovery deadlines in place were specific or vague. Brewer &

Pritchard, P.C. v. Johnson, 167 S.W.3d 460, 467 (Tex. App.—Houston [14th

Dist.] 2005, pet. denied).

The record shows that Appellants filed suit in April 2011 and that Appellees

filed their motion for summary judgment in March 2012, almost a year later and a

few weeks before the close of the discovery period.3 See Tex. R. Civ. P. 190.3.

Appellants do not contend that they propounded any discovery during this

lengthy period of time, and they even failed to respond to Appellees’ discovery

requests. Moreover, ―[w]hen a party contends that it has not had an adequate

opportunity for discovery before a summary judgment hearing, it must file either

an affidavit explaining the need for further discovery or a verified motion for

continuance.‖ Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 647 (Tex.

1996). Appellants did neither. In light of the foregoing, we hold that the trial

court did not abuse its discretion by ruling on Appellees’ summary judgment

when it did. See Robeson, 2012 WL 42965, at *4 (reasoning similarly). We

overrule Appellants’ second issue.

3 Appellees served Appellants with discovery on June 6, 2011.

11 V. CONCLUSION

Having sustained two parts of Appellants’ first issue, we (1) reverse the

trial court’s order as to Appellants’ fraudulent lien claim and remand this case to

the trial court for further proceedings on that claim and (2) modify the portion of

the order awarding Appellees $6,000 for attorneys’ fees to reflect that Appellees

are awarded $5,000 for attorneys’ fees. Having overruled the remainder of

Appellants’ first issue and their second issue, we affirm the trial court’s order as

modified.

BILL MEIER JUSTICE

PANEL: LIVINGSTON, C.J.; MEIER and GABRIEL, JJ.

DELIVERED: June 20, 2013