Choice Personnel No. Four Inc. and Choice Acquisitions No. Three Inc v. Hebert Richardson and John Gilmore

• Court: Court of Appeals of Texas
• Decided: July 27, 2006
• Docket: 14-05-00675-CV
• Status: Published

Opinion

Affirmed and Memorandum Opinion filed July 27, 2006

Affirmed and Memorandum Opinion filed July 27, 2006.

In The

Fourteenth Court of Appeals

____________

NO. 14-05-00675-CV

CHOICE PERSONNEL NO. FOUR, INC. AND CHOICE ACQUISITIONS NO. THREE, INC., Appellants

V.

HERBERT RICHARDSON AND JOHN GILMORE, Appellees

On Appeal from the 113th Judicial District Court

Harris County, Texas

Trial Court Cause No. 04-71620

M E M O R A N D U M    O P I N I O N

This is the latest appeal in a series of lawsuits regarding ownership of an apartment complex that was purchased at a foreclosure sale by appellees, Herbert Richardson and John Gilmore (collectively, Athe Owners@).  The trial court granted summary judgment in the Owners= favor on all claims by appellants Choice Personnel No. Four, Inc. (AChoice Personnel@) and Choice Acquisitions No. Three, Inc. (AChoice Acquisitions@; collectively, Athe Choice Companies@) and denied appellant Choice Personnel=s motion for partial summary judgment.  We hold the Choice Companies= causes of action are time-barred, and therefore, affirm the judgment of the trial court.

I.  Factual and Procedural History

The apartment complex at issue is located at Lot 7, block 8 of Hillendahl Acres in Harris County, Texas (Athe Property@).  On or about November 1, 1988, Investment Choices Corp. purchased the Property from Johanna Square Company, Ltd. via warranty deed with a promissory note secured by a deed of trust (ADeed of Trust@) executed by David A. Newman,  president of Investment Choices.  The Deed of Trust authorized the trustee or his substitute or successor to sell the Property at a non-judicial foreclosure sale in the event of default.^[1]

On or about November 7, 1988, Investment Choices, acting through Dov Avni Kaminetzky, conveyed half of its interest in the Property to Howard Weiss.  A few weeks  later, Kaminetzky conveyed Investment Choices=s remaining one-half interest in the Property to Tamar Avni Kaminetzky a/k/a Tamar Avni.  Thereafter, Weiss and Avni each conveyed their ownership in the Property to Choice Acquisitions .^[2]

Approximately four years later, on September 22, 1992, Kaminetzky, acting both as trustee of Investment Choices and as president of Choice Acquisitions, executed a ASecond Modification and Extension of Real Estate Note and Liens@ (ASecond Modification@).  Significantly, this document also acknowledged the Deed of Trust.

The Owners purchased the Property at a non-judicial foreclosure sale conducted by a substitute trustee on August 3, 1999.  The Substitute Trustee=s Deed, executed the same day, recites that Berfal Properties, Inc. is the holder and assignee of the Deed of Trust, and all prerequisites required by law and/or by the Deed of Trust have been fully satisfied.

After the foreclosure sale, Choice Acquisitions executed a special warranty deed^[3] conveying a one-third interest in the Property, all rental activities, and all detachable and personal property to Choice Personnel by and through Kaminetzky acting as (1) president of Choice Personnel, (2) co-owner of the Property,^[4] and (3) Aassignee of causes of action against >Johanna Square Co., Ltd.,[=] the prior lender on this project, its successors, transferees and assigns.@  The special warranty deed referred to Choice Personnel and Kaminetzky jointly as AGrantee,@ and was made Asubject to all liens now affecting the [P]roperty . . . but without ratifying same or assuming personal liability thereunder.@  The deed also stated in relevant part:

Grantee expressly assumes hereby any and all liabilities, if any, of Grantors, with respect to any claim asserted or any lawsuit that may be filed against or in connection with any of the above listed property interests conveyed herein, or with respect to any action to determine ownership or possessory rights related thereto, and by this presents declares and represents that it will [indemnify] and [hold] harmless Grantees [sic]^[5] against any such claim, liability or judgment, and against any cost or damage related thereto, and hereby assumes the position of Grantor in any such dispute as its assignee/substitute. 

Kaminetzky signed the deed as AIndividual Grantee/Assignee and as authorized corporate representative of [Choice Personnel].@  The document was ratified by Choice Acquisitions and by Kaminetzky in his capacity as president and CEO of Choice Personnel on August 3, 1999Cthe day of the foreclosure sale.

Seventeen days after the sale, the Owners filed suit against Kaminetzky, Investment Choices^[6] and another corporation, alleging interference with the Owners= title and ownership.^[7]  The Owners obtained summary judgment against Investment Choices, and final judgment as to all parties on February 3, 2000.  The judgment permanently enjoined Kaminetzky and any corporation or entity directly or indirectly controlled by him from attempting to exclude the Owners from possession of the Property and from causing any further documents pertaining to the Property to be filed in the real property records of Harris County.  On June 26, 2003, the First Court of Appeals affirmed the judgment of the trial court.  Kaminetzky v. Richardson, No. 01-00-00575-CV, 2003 WL 21470396, (Tex. App.CHouston [1st Dist.] June 26, 2003, pet. denied) (mem. op.).

Choice Acquisitions and Choice Personnel filed the instant suit on December 20, 2004.  Nine days after this suit was filed, Kaminetzky filed a ANotice of Disaffirmation of Debt@ in the property records of Harris County.^[8]  In that document, Kaminetzky asserted that (1) Newman did not have authority to execute the original Deed of Trust on behalf of Investment Choices; (2) Investment Choices could not legally conduct business in Texas at any time before November 10, 1988; and (3) the Second Modification was never ratified or approved by Investment Choices=s board of directors.

Choice Personnel moved for partial summary judgment, asking the trial court to declare the Owners never had any valid, legal ownership of the Property, and to invalidate any of the Owners= conveyances of the Property.^[9]  The trial court denied the motion on March 21, 2005.

The Owners then moved for final summary judgment, arguing that the Choice Companies= causes of action were time-barred.  Relying on the final adjudication of the prior suit, the Owners also asserted res judicata and collateral estoppel as alternative summary judgment grounds.  On April 21, 2005, the trial court granted the Owners= summary judgment motion without specifying the grounds, and this appeal ensued.

II.  Issues

The Choice Companies have preserved ten issues for our review,^[10] challenging the trial court=s orders granting the Owners= motion for final summary judgment and denying Choice Personnel=s motion for partial summary judgment.  In four issues, the Choice Companies argue their claims for possession of the Property are not barred by the statute of limitations governing adverse possession under title or color of title as the Owners contend.  Specifically, the Choice Companies assert the Deed of Trust foreclosed upon is void, and the Substitute Trustee=s Deed is a quitclaim deed, and thus, is not evidence of title supporting the Owners= claim of adverse possession.  In four additional issues, the Choice Companies contend summary judgment must be reversed because the Owners failed to prove the validity of the recitals in the Substitute Trustee=s Deed, and obtained the Property through fraud on the court.  Although not included among the Choice Companies= stated issues, they also argue the Owners are not entitled to summary judgment on the Choice Companies= claims of conversion and fraud because the Owners failed to present evidence negating the discovery rule.  Finally, the Choice Companies argue the Owners are not entitled to summary judgment on their alternative grounds of res judicata and collateral estoppel because the Choice Companies are not in privity with the parties in the prior lawsuit. 

III.  Standard of Review

The Choice Companies ask us to reverse the trials court=s grant of summary judgment in favor of the Owners and render summary judgment in favor of the Choice Companies. Before an appellate court may reverse summary judgment for one party and render judgment for the other party, both parties must ordinarily have sought final judgment relief in their cross motions for summary judgment.  See CU Lloyd=s of Tex. v. Feldman, 977 S.W.2d 568, 569 (Tex. 1998).  However, when the relief sought is a declaratory judgment, an appellate court may properly render judgment on liability alone.  Id.  Because Choice Personnel=s motion for partial summary judgment sought declaratory judgment, we review both motions.  We apply the same standard of review for the denial of summary judgment as for the granting of summary judgment.  Ervin v. James, 874 S.W.2d 713, 715 (Tex. App.CHouston [14th Dist.] 1994, writ denied).  When a trial court grants summary judgment for one movant and denies it for another without specifying the reason for its ruling, we affirm the trial court=s judgment if any of the grounds raised in the prevailing party=s motion are meritorious.  Carlton v. Trinity Universal Ins. Co., 32 S.W.3d 454, 458 (Tex. App.CHouston [14th Dist.] 2000, pet. denied).

A traditional summary judgment may be granted if the motion and summary judgment evidence show there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.  Tex. R. Civ. P. 166a(c).  In reviewing a summary judgment, we take as true all evidence favorable to the nonmovant and indulge every reasonable inference, and resolve any doubts, in the nonmovant=s favor.  Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).  When the trial court does not specify the basis for its summary judgment, the appealing party must show each independent ground alleged is insufficient to support the summary judgment granted.  See Star‑Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).

IV.  Analysis

A.      Statutes of Limitations

1.       Real Property Claims

In their motion for final summary judgment, the Owners contend they adversely possessed the Property under title or color of title on August 3, 1999, and thus, the Choice Companies= claims for possession or ownership are barred by the three-year statute of limitations.  See Tex. Civ. Prac. & Rem. Code Ann. ' 16.024 (Vernon 2002) (party must file suit to recover real property held by another in peaceable and adverse possession under title or color of title not later than three years after the day the cause of action accrues).  The Choice Companies respond that summary judgment cannot be affirmed on this basis because section 16.024 does not apply to the Owners= claims.  Specifically, the Choice Companies argue the Owners do not hold the Property under title or color of title because Newman, then-president of Investment Choices, was not authorized to sign the Deed of Trust and his act was not ratified or approved by the board of directors of Investment Choices.  Thus, the Choice Companies claim the 1988 Deed of Trust is void.  The Choice Companies also assert that  the Substitute Trustee=s Deed does not constitute title or color of title because it is a quitclaim deed.  In a related argument, the Choice Companies contend summary judgment must be reversed because the Owners failed to prove the recitals of the Substitute Trustee=s Deed.

a.       Validity of the 1988 Deed of Trust

The summary judgment evidence establishes that within sixty days of its 1988 purchase, Investment Choices conveyed the Property subject to the Deed of Trust.  Regardless of whether Newman was initially authorized to purchase the Property subject to the Deed of Trust, Investment Choices ratified the transaction by these subsequent conveyances.  See  Zieben v. Platt, 786 S.W.2d 797, 802 (Tex. App.CHouston [14th Dist.] 1990, no writ) (ARatification occurs when a party recognizes the validity of a contract by acting under it, performing under it or affirmatively acknowledging it.@) (emphasis added).^[11] Investment Choices=s successors in interest also ratified the Deed of Trust before any share of the Property was conveyed to the Choice Companies.  Thus, this argument is without merit.

b.       Characterization of the Substitute Trustee=s Deed 

The Choice Companies contend that the Substitute Trustee=s Deed does not constitute title or color of title sufficient to begin the Owners= period of adverse possession under section 16.024 because the Substitute Trustee=s Deed is actually a quitclaim deed.  See Rogers v. Ricane Enters., Inc., 884 S.W.2d 763, 769 (Tex. 1994) (holding a quitclaim deed is not a conveyance or a muniment of title and does not establish any title in those holding the deed, but merely passes the interest of the grantor in the property).

In deciding whether an instrument is a quitclaim deed, courts look to whether the language of the instrument, taken as a whole, conveyed the property or merely the grantor=s rights.  Geodyne Energy Income Prod. P=ship I-E v. Newton Corp., 161 S.W.3d 482, 486B87 (Tex. 2005) (assignment and bill of sale that never stated the nature or percentage interest that was being conveyed and expressly disclaimed warranty of title was a quitclaim deed).  Here, the Substitute Trustee=s Deed identifies the Property by legal description and recites the history of the unpaid promissory note, the Deed of Trust, and events surrounding the substitute trustee=s appointment and the conduct of the sale.  The Substitute Trustee=s Deed further states:

Substitute Trustee . . . has GRANTED, SOLD and CONVEYED the Subject Property, and by these presents does GRANT, SELL, AND CONVEY the Subject Property, unto Purchaser and Purchaser=s heirs, executors, administrators, successors and assigns. 

This conveyance is made, and Grantee hereby agrees to accept and by its acceptance of the Deed Grantee does hereby accept the Subject Property in its AAS IS@ condition, subject to all restrictions, covenants, conditions, liens, encumbrances, reservations, easements, and other exceptions to title, if any, relating tot he [sic] Subject Property, and to all zoning law, regulations[,] and ordinances of municipal and/or governmental authorities, if any, relating to the Subject Property; it being expressly understood and agreed that any and all warranties, whether expressed or implied, and whether of merchantability, habitability or fitness of purpose, are expressly waived by Purchaser. 

TO HAVE AND TO HOLD the Subject Property, together with the rights, privileges and appurtenances thereto belonging, unto Purchaser and Purchaser=s heirs, executors, administrators, successors and assigns forever.  And Substitute Trustee does hereby bind Debtor and Debtor=s successors to warrant and forever defend the Subject Property unto Purchaser and Purchaser=s heirs, executors, administrators, successors and assigns forever, against the claim or claims of all persons claiming or to claim the same or any part thereof.

Taken as a whole, we conclude the Substitute Trustee=s Deed does not merely convey the grantor=s rights, but conveys the Property.  See Whitehead v. State, 724 S.W.2d 111, 113 (Tex. App.CBeaumont 1987, pet. ref=d) (holding that a deed reciting, in substance, that grantor granted, sold, and conveyed to grantee all of grantor=s rights, title, and interest to three separate tracts of land in question, which described those tracts in detail, and which did not use the word Aquitclaim@ or words Aremise, release, and forever quitclaim,@ was not a quitclaim deed).^[12]  Accordingly, we conclude the Owners assert their claims to the Property Aunder title or color of title.@

c.       Recitals of the Substitute Trustee=s Deed

The Choice Companies also argue the Owners are not entitled to summary judgment because the Owners produced no evidence that, at the time of the foreclosure sale, Berfal Properties owned the note and Investment Choices was in default.  This is incorrect.  The Owners produced the Substitute Trustee=s Deed that states Berfal Properties owns the note and all prerequisites to the sale have been satisfied.  The recitals in the Substitute Trustee=s Deed constitute prima facie evidence of the validity of the foreclosure sale.  See Deposit Ins. Bridge Bank, N.A., Dallas v. McQueen, 804 S.W.2d 264, 266 (Tex. App.CHouston [1st Dist.] 1991, no writ)  (holding that recitals in a deed are presumed to be correct, unless rebutted by competent evidence).  The Choice Companies offered no evidence rebutting the presumption that these recitals are correct; therefore, the Owners were not required to produce evidence proving the deed=s recitals.

The summary judgment evidence establishes that the Owners hold the Property under title or color of title.  The Choice Companies failed to bring suit within three years of the time the Owners acquired title, therefore, we conclude the trial court could have found their claims for ownership or possession of the real Property were time-barred. 

2.       Personal Property Conversion Claims

Conversion claims are governed by a two-year statute of limitations.  Tex. Civ. Prac. & Rem. Code Ann. ' 16.003(a) (Vernon Supp. 2005).  The limitations period for a conversion claim begins to run at the time of the allegedly unlawful taking.  Rogers v. Ricane Enters., Inc., 930 S.W.2d 157, 166 (Tex. App.CAmarillo 1996, writ denied).  Because the Owners took possession of the premises on August 3, 1999, more than two years before the Choice Companies filed suit, their claims are time-barred.^[13]

The Choice Companies contend the Owners= summary judgment cannot be affirmed on this basis because the Owners failed to produce evidence of the date the Choice Companies should have discovered the alleged conversion.  The discovery rule was not raised by the Choice Companies= pleadings; thus, the Owners were not required to negate its application in order to prevail.  See Tex. R. Civ. P. 94; Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 518 (Tex. 1988) (where the party relying on the discovery rule fails to raise the matter in its pleadings, the defense is waived).

3.       Fraud Claims

The Owners produced affidavit summary judgment evidence showing they have had no communications with the Choice Companies unrelated to judicial proceedings since August 3, 1999, and thus, the Choice Companies= fraud claims are barred by the four-year statute of limitations.  See Tex. Civ. Prac. & Rem. Code Ann. ' 16.004(a)(4) (Vernon 2002) (fraud claims are governed by a four-year statute of limitations); see also Randolph v. Walker, 29 S.W.3d 271, 278 (Tex. App.CHouston [14th Dist.] 2000, pet. denied) (statements made in relation to a proposed or existing judicial proceeding are absolutely privileged, and cannot constitute the basis of a civil action).  The burden therefore shifted to the Choice Companies to produce some evidence that the Owners made a non-judicial, fraudulent representation to the Choice Companies less than four years before the Choice Companies filed this suit. 

The Choice Companies produced no evidence that the Owners committed fraud against them; rather, the Choice Companies respond by claiming Richardson committed Afraud on a court of law.@  Although the Choice Companies= petition in this case alleged that ARichardson has committed fraud,@ it did not allege Afraud on a court of law.@  Reading the petition as broadly as possible does not extend the claim of fraud far enough to encompass fraud upon unidentified courts.  Because such a claim was not asserted in the Choice Companies= petition or tried by consent, we affirm the summary judgment in the Owners= favor on the Choice Companies= fraud claims.^[14]

B.      Choice Personnel=s Motion for Partial Summary Judgment

Choice Personnel=s partial summary judgment grounds were addressed in the Owners= motion for final summary judgment; accordingly, the above analysis applies to both motions.   Therefore, we affirm the trial court=s orders granting final summary judgment in favor of the Owners and denying Choice Personnel=s motion for partial summary judgment.^[15]  

V.  Conclusion

Because the Owners have established as a matter of law that the Choice Companies= claims are barred by the applicable statutes of limitations, we need not address whether the Choice Companies= current claims are barred by res judicata or collateral estoppel. Moreover, we hold that the Choice Companies= remaining issues and arguments are waived. 

Accordingly, we affirm the judgment of the trial court.

/s/        Eva M. Guzman

Justice

Judgment rendered and Memorandum Opinion filed July 27, 2006.

Panel consists of Justices Fowler, Edelman, and Guzman.

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^[1]  Both documents were recorded together in Harris County=s property records on November 8, 1988.

^[2]  Each of these conveyances was made via warranty deed subject to the deed of trust, and all were recorded on August 24, 1990. The conveyance from Avni was executed by Kaminetzky, as Avni=s attorney-in-fact.

^[3]  By its terms, the conveyance was effective at 5:00 p.m. on the day of the sale. See Tex. Prop. Code Ann. ' 51.002(a) (Vernon Supp. 2005) (a public auction of real property under a deed of trust must be held between 10:00 a.m. and 4:00 p.m.).

^[4]  The deed indicated that Kaminetzky had previously purchased 9.6% of the Property.

^[5]  It appears that AGrantors@ was intended.

^[6]  By this time, Investment Choices had changed its name, and was now known as Investment Performance Corporation f/k/a Investment Choices Corporation.  For clarity, we will continue to refer to it as Investment Choices.

^[7]  Herbert Richardson and John E. Gilmore v. Dov Avni Kaminetzky a/k/a Dov K. Avni, Investment Performance Corporation f/k/a Investment Choices Corporation and Hi-Noi Corporation, Cause No. 99-40435 in the 61st Judicial District Court of Harris County, Texas.  The same day the Owners filed suit, they recorded their Substitute Trustee=s Deed, and Kaminetzky recorded the deed from Choice Acquisitions to Choice Personnel.

^[8]  This document was apparently filed in violation of the injunction discussed above.

^[9]  Choice Personnel also requested an award of attorney fees.

^[10]  Although the Choice Companies list twenty-one issues for review and state a number of additional arguments unconnected to these issues, they have waived the majority of their arguments.  See Tex. R. App. P. 38.1(h) (appellate briefs must Acontain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record.@); Tex. R. App. P. 33.1. (with certain exceptions not presented here, an issue is not preserved for review when the appellants failed to present the issue to the trial court and obtain a ruling.); Tacon Mech. Contractors, Inc. v. Grant Sheet Metal, Inc., 889 S.W.2d 666, 671 (Tex. App.CHouston [14th Dist.] 1994, writ denied) (when appellants= stated issues are not supported by authorities or citation to the record, but contain mere conclusory arguments, those issues are waived).

^[11]  These conveyances were executed by Kaminetzky, and the Choice Companies do not contend Kaminetzky was not authorized to convey the Property subject to the Deed of Trust.

^[12]  The Choice Companies also argue that the Substitute Trustee=s Deed is void because it states the Deed of Trust was signed by Kaminetzky, rather than by Newman.  The Choice Companies have cited no authority for the proposition that a trustee=s deed that correctly identifies a deed of trust by file number and film code number is void solely because it misstates the name of the grantor=s trustee.  This argument is therefore waived.  Tex. R. App. P. 38.1(h).

^[13]  Choice Acquisitions conveyed its interest, if any, in the personal property to Choice Personnel on August 3, 1999.  Thus, Choice Acquisitions lacks standing to challenge the Owners= summary judgment on these claims.

^[14]  We do not reach the question of whether  a separate civil cause of action exists for Afraud on a court of law.@ See Dunn v. Murrin, No. 05-04-00438-CV, 2005 WL 2038057, at *3 (Tex. App.CDallas 2005, no pet.) (mem. op.) (sustaining dismissal of cause of action for Afraud on the court@ for failure to state a viable claim).

^[15]  Choice Acquisitions joins Choice Personnel=s appeal of the trial court=s ruling denying Choice Personnel=s motion for partial summary judgment.  To appeal an alleged error, a party must show that the error injuriously affects it.  Torrington Co. v. Stutzman, 46 S.W.3d 829, 844 (Tex. 2000).  Because Choice Acquisitions has not shown it is harmed by the trial court=s denial of Choice Personnel=s motion, Choice Acquisitions lacks standing to appeal the denial of that motion.