Bank of New York Mellon, as Indenture Trustee for Newcastle Mortgage Securities Trust 2006-1 v. FFGGP, Inc. Successor Trustee for the Nimitz Way 1229 Land Trust

• Court: Court of Appeals of Texas
• Decided: March 11, 2022
• Docket: 05-20-00384-CV
• Status: Published

Opinion

REVERSE; RENDER Judgment; and REMAND and Opinion Filed March 11, 2022

S In The Court of Appeals Fifth District of Texas at Dallas No. 05-20-00384-CV

BANK OF NEW YORK MELLON, AS INDENTURE TRUSTEE FOR NEWCASTLE MORTGAGE SECURITIES TRUST 2006-1, Appellant V. FFGGP, INC. SUCCESSOR TRUSTEE FOR THE NIMITZ WAY 1229 LAND TRUST, Appellee

On Appeal from the 160th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-19-00161

MEMORANDUM OPINION Before Justices Molberg, Nowell, and Goldstein Opinion by Justice Goldstein Bank of New York Mellon, as indenture trustee for Newcastle Mortgage

Securities Trust 2006-1 (BNYM), appeals the trial court’s order granting the motion

for summary judgment filed by FFGGP, Inc., successor trustee for the Nimitz Way

1229 Land Trust (FFGGP) and dismissing BNYM’s bill of review. In two issues,

BNYM argues the trial court erred in dismissing its bill of review based upon legal

infirmities related to pleading and service. We reverse the trial court’s judgment, render summary judgment granting BNYM’s bill of review, and remand for further

proceedings on the merits of the underlying suit.

Background

In January 2019, BNYM filed its original petition for bill of review alleging

FFGGP filed a suit to quiet title on certain real property on which BNYM had a

superior mortgage lien. BNYM alleged FFGGP obtained a default judgment

invalidating BNYM’s superior lien despite failing to serve proper notice of the

lawsuit on BNYM. Specifically, BNYM complained FFGGP executed service on

BNYM via substituted service on the secretary of state notwithstanding the fact that

BNYM maintains a registered agent in Texas. Because FFGGP failed to properly

serve BNYM, BNYM argued, it was entitled to have its bill of review granted and

the final judgment in favor of FFGGP set aside.

The parties filed cross motions for summary judgment. In its motion, FFGGP

argued that, because BNYM was sued in its representative capacity as a trustee, it

was properly served under the Texas Estates Code. BNYM argued that a party suing

a financial institution such as BNYM must serve process on the institution in

accordance with section 17.028 of the civil practice and remedies code; otherwise,

service is ineffective. In February 2020, the trial court granted FFGGP’s traditional

motion for summary judgment and dismissed BNYM’s bill of review. This appeal

followed.

–2– Because it is dispositive of this appeal, we first address BNYM’s argument

that FFGGP “attempted to circumvent the mandate of Section 17.028 and serve[d]

BNYM via the Secretary of State under the Estate [sic] Code.” BNYM argues the

trial court erred in granting FFGGP’s motion for summary judgment and dismissing

BNYM’s bill of review.

Standards of Review

We review a traditional motion for summary judgment de novo to determine

whether a party's right to prevail is established as a matter of law. See HCBeck, Ltd.

v. Rice, 284 S.W.3d 349, 352 (Tex. 2009); Dickey v. Club Corp., 12 S.W.3d 172,

175 (Tex. App.—Dallas 2000, pet. denied). When we review a traditional summary

judgment, we determine whether the defendant conclusively disproved an element

of the plaintiff’s claim or conclusively proved every element of an affirmative

defense. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997); see also

TEX. R. CIV. P. 166a(c). We take evidence favorable to the nonmovant as true, and

we indulge every reasonable inference and resolve every doubt in favor of the

nonmovant. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005).

We review the denial of a bill of review for an abuse of discretion. Ramsey v.

Davis, 261 S.W.3d 811, 815 (Tex. App.—Dallas 2008, no pet.). Generally, a party

seeking a bill of review must allege and prove that (1) he had a meritorious defense

to the underlying cause of action, (2) which he was prevented from making because

of fraud, accident, or a wrongful act by the opposite party, (3) that was untainted by

–3– any fault or negligence of his own. Caldwell v. Barnes (Caldwell II), 154 S.W.3d

93, 96 (Tex. 2004).

Analysis

When a bill of review is based solely on a claim of non-service, however, the

bill of review plaintiff is only required to prove the third element. Id. at 96–97. An

individual who is not served with process cannot be at fault or negligent in allowing

a default judgment to be rendered; therefore, the third element is conclusively

established if the bill of review plaintiff proves non-service. Id. at 97 (citing

Caldwell v. Barnes (Caldwell I), 975 S.W.2d 535, 537 (Tex. 1998)). The burden is

on the bill of review plaintiff to show by a preponderance of the evidence that he

was not served. Id. at 98.

The Supreme Court of Texas recently determined that section 17.028 of the

civil practice and remedies code provides the exclusive means for service of process

on a financial institution. See TEX. CIV. PRAC. & REM. CODE § 17.028; U.S. Bank

Nat’l Ass’n v. Moss, No. 20-0517, slip op. at 2 (Tex. Feb. 25, 2022), available at

https://www.txcourts.gov/media/1453691/200517.pdf. Section 17.028 requires

service on the institution’s registered agent. See TEX. CIV. PRAC. & REM. CODE §

17.028. The Moss court held that “service on the Secretary [of State] as a foreign

corporate fiduciary’s ‘agent’ under Chapter 505 does not constitute service on a

financial institution’s ‘registered agent’ for purposes of section 17.028.” Id.

Accordingly, we sustain BNYM’s issue to the extent it argues that service under

–4– chapter 505 of the Texas Estates Code was ineffective, and service under section

17.028 was mandatory. Because of our disposition of this issue, we need not address

BNYM’s remaining issues.

We reverse the trial court’s judgment, render summary judgment granting

BNYM’s bill of review, and remand for further proceedings on the merits of the

underlying suit.

/Bonnie Lee Goldstein/ BONNIE LEE GOLDSTEIN JUSTICE

200384F.P05

–5– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT

BANK OF NEW YORK MELLON, On Appeal from the 160th Judicial AS INDENTURE TRUSTEE FOR District Court, Dallas County, Texas NEWCASTLE MORTGAGE Trial Court Cause No. DC-19-00161. SECURITIES TRUST 2006-1, Opinion delivered by Justice Appellant Goldstein. Justices Molberg and Nowell participating. No. 05-20-00384-CV V.

FFGGP, INC. SUCCESSOR TRUSTEE FOR THE NIMITZ WAY 1229 LAND TRUST, Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is REVERSED and summary judgment is RENDERED granting Bank of New York Mellon’s bill of review and setting aside the default judgment against Bank of New York Mellon. This case is REMANDED for further proceedings consistent with this opinion.

It is ORDERED that appellant BANK OF NEW YORK MELLON, AS INDENTURE TRUSTEE FOR NEWCASTLE MORTGAGE SECURITIES TRUST 2006-1 recover its costs of this appeal from appellee FFGGP, INC. SUCCESSOR TRUSTEE FOR THE NIMITZ WAY 1229 LAND TRUST.

Judgment entered this 11th day of March 2022.

–6–