Derwin Tatum v. Wells Fargo Home Mortgage, Inc. and Federal Home Loan Mortgage Corporation

• Court: Court of Appeals of Texas
• Decided: January 14, 2015
• Docket: 01-13-00855-CV
• Status: Published

Opinion

ACCEPTED 01-13-00855-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 1/14/2015 4:15:33 PM CHRISTOPHER PRINE CLERK

CASE NO. 01-13-00855-CV ____________________________________________________ FILED IN 1st COURT OF APPEALS IN THE HOUSTON, TEXAS FIRST COURT OF APPEALS 1/14/2015 4:15:33 PM Houston, Texas CHRISTOPHER A. PRINE Clerk ____________________________________________________

DERWIN TATUM Appellant

v.

WELLS FARGO HOME MORTGAGE, INC. AND FEDERAL HOME LOAN MORTGAGE CORPORATION Appellees _____________________________________________________

On Appeal from the 400th Judicial District Court Fort Bend County, Texas Cause No. 10-DCV-182578 The Honorable Clifford J. Vacek, Presiding __________________________________________________

APPELLEES’ MOTION FOR REHEARING ____________________________________________________

George A. Kurisky, Jr. Texas Bar No. 11767700 gkurisky@jdkglaw.com Daniel J. Kasprzak Texas Bar No. 11105300 dkasprzak@jdkglaw.com Branch M. Sheppard Texas Bar No. 24033057 bsheppard@jdkglaw.com JOHNSON DELUCA KURISKY & GOULD, P.C. 1221 Lamar, Suite 1000 Houston, Texas 77010 (713) 652-2525 – Telephone (713) 652-5130 – Facsimile

ATTORNEYS FOR APPELLEES, WELLS FARGO HOME MORTGAGE, INC. AND FEDERAL HOME LOAN MORTGAGE CORP. GROUNDS FOR REHEARING

The panel reversibly erred by holding that the Order Granting Defendants’

Motion for Adequate Protection (the “Adequate Protection Order”) was an

injunction subject to the formal requirements of Rules 683 and 684.

STATEMENT OF ISSUES PRESENTED

Wells Fargo Home Mortgage, Inc. (“Wells Fargo”) and Federal Home Loan

Mortgage Corporation (“Freddie Mac”) submit this motion for rehearing, pursuant

to Tex. R. App. P. 49.1, asking the panel to reconsider the portion of its opinion

declaring the Adequate Protection Order void, vacating that order, and remanding

the case to the trial court for a determination of what funds, if any, should be

refunded to Derwin Tatum (“Tatum”). The specific properties of the Adequate

Protection Order do not impose additional duties on Tatum and do not compel him

to complete any act that he is not already obligated to perform. Deeming the

Adequate Protection Order to be an injunction unnecessarily expands the definition

of “injunction” and interferes with the trial court’s exercise of its equitable powers.

1 ARGUMENT AND AUTHORITIES

A. THE PANEL REVERSIBLY ERRED BY HOLDING THAT THE ORDER GRANTING DEFENDANTS’ MOTION FOR ADEQUATE PROTECTION WAS AN INJUNCTION, AND SUBJECT TO THE FORMAL REQUIREMENTS OF RULES 683 AND 684.

a. The Adequate Protection Order is not an injunction.

Applying Qwest Communication Corp. v. AT&T, the panel found that the

Adequate Protection Order was a temporary injunction subject to the formal

requirements of Texas Rules of Civil Procedure 683 and 684. See Qwest

Communication Corp. v. AT&T, 24 S.W.3d 334 (Tex. 2000).

In Qwest Communications, the Supreme Court reviewed an appellate court’s

determination that it lacked appellate jurisdiction to review a trial court order

because the trial court’s order was not an injunction. See TEX. CIV. PRAC. & REM.

CODE §51.014(a)(4). In Quest, AT&T sought compensation for damage to fiber

optic cables allegedly caused by Qwest. Qwest, 24 S.W.3d at 335.

AT&T sought injunctive relief. At the temporary injunction hearing, the

parties announced an agreement that required Qwest to notify AT&T of operations

near AT&T cables and to employ electronic monitoring equipment during its

drilling and pull-back operations. Id. Following the hearing, the parties were

unable to reduce the announced agreement to a form of order. The Court held a

“clarification hearing” where the court entered an order in accordance with the

2 prior announcement of the parties. Id.

Qwest appealed. The appellate court dismissed the appeal for lack of

jurisdiction, finding that the order was not a temporary injunction and not subject

to interlocutory appeal. The Supreme Court reversed the appellate court’s

determination, finding that appellate jurisdiction existed. The Supreme Court

found that the trial court’s order was a temporary injunction. Qwest, 24 S.W.3d at

338.

The Supreme Court noted that it is the character and function of an order

that determines its classification. Qwest, 24 S.W.3d at 336 (citing Del Valle I.S.D.

v. Lopez, 845 S.W.2d 808, 809 (Tex. 1992). The opinion states that “[t]he trial

court’s order here commands Qwest to undertake certain monitoring and notice

provisions when conducting certain boring operations. Thus, the order is an

injunction.” Qwest, 24 S.W.3d at 336. AT&T’s primary challenge to this

characterization was that the order was, by its own terms, effective for a period of

three years or until modified or extended by the trial court. Temporary injunctions

are effective until modified by the court or until the final trial. J.C. Matlock v.

Data Processing Sec., Inc., 618 S.W.2d 327, 328 (Tex. 1981).

The Supreme Court began with the premise that the trial court’s order was a

temporary injunction. The order was entered in response to an application for

temporary injunction, and at the Plaintiff’s request. It was entered following a

3 temporary injunction hearing. The order was entered, seemingly, on the

understanding of all parties that the order was a form of injunction. The only

issue actually addressed by the Qwest court is “whether the fixed three-year

term precludes the order’s classification as a temporary injunction.” Qwest,

24 S.W.3d at 336. The Supreme Court concluded “[b]ecause the trial court’s order

places restrictions on Qwest and is made effective immediately so that it operates

during the pendency of the suit, it functions as a temporary injunction.” Qwest, 24

S.W.3d at 337.

With respect to Tatum, the trial court neither restrained motion nor enforced

action. The Adequate Protection Order did not create additional duties on behalf

of Tatum. The Adequate Protection Order did not prohibit Tatum from

undertaking a specific action. Had the court found the foreclosure sale to be

wrongful, the Note and Deed of Trust would remain valid, executory, and in full

force and effect. Tatum would owe monthly payments to Wells Fargo. The trial

validated the foreclosure sale. Tatum holds over as a tenant at sufferance. Tatum

is liable to Freddie Mac for the reasonable value of the use of the property for the

time in which he holds over. Kaplan v. Floeter, 657 S.W.2d 1, 3 (Tex.App. –

Houston [1st Dist.] 1983, no pet.). In either case, Tatum is under a legal duty to

remit payments to either Wells Fargo or Freddie Mac. This duty exists

independent of the Adequate Protection Order.

4 But for the Adequate Protection Order, Tatum would have to choose

between Wells Fargo and Freddie Mac as to the appropriate party to make payment

(assuming he attempted to pay anyone). The net effect of the Adequate Protection

Order is to preserve Tatum’s payments in the registry of the trial court until a

determination could be made as to the proper party to receive payments. Similar

procedures exist under Texas law in the form of an equitable action for interpleader

and under the Texas Property Code’s provisions governing payment of rent by a

tenant during the appeal of an eviction. See Northshore Bank v. Commercial

Credit Corp. 668 S.W.2d 787, 790 (Tex.App. – Houston [14th Dist.] 1984, writ

ref’d n.r.e.) (An interpleader is a suit in equity.); and TEX. PROP. CODE §24.0053

(Provides for payment of rent into the court’s registry during eviction appeal.)

While the Adequate Protection Order was entered at the request of Wells

Fargo and Freddie Mac and was effective immediately and for the duration of the

case, the order does not serve the same purpose as an injunction. The purpose of a

temporary injunction is to preserve the status quo with respect to the subject matter

of the lawsuit until a final hearing can be held on the merits of the case. Butnaru v.

Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002). The subject matter of the

litigation is the real property and improvements located at 610 Hard Rock Lane,

Richmond, Texas 77469 (the “Property”).

5 The Adequate Protection Order addresses Tatum’s payment of money into

the court’s registry. The Adequate Protection Order has no effect on the Property

or on any party’s rights in or to the Property. The order simply does not fulfill the

purpose of a temporary injunction.

A court can order payment of disputed funds into its registry until ownership

can be determined. Ex Parte Preston, 347 S.W.2d 938 (Tex. 1961); Castilleja v.

Camero, 414 S.W.2d 431, 433 (Tex. 1967); North Cypress Medical Center

Operating Co., Ltd. v. St. Laurent, 296 S.W.3d 171, 178-79 (Tex. App.–Houston

[14th Dist.] 2009, no pet.). Moreover, courts limit authority to protect funds

beyond the confines of the statutes and rules regarding extraordinary remedies.

Alliance Royalties, LLC v. Boothe, 313 S.W.3d 493, 497 (Tex. App. – Dallas 2010,

no pet.). On these grounds, the Adequate Protection Order is not an injunction.

The Court should reconsider its finding that the Adequate Protection Order acts an

injunction.

B. THE TRIAL COURT PROPERLY ENTERED THE ADEQUATE PROTECTION ORDER UNDER THE TRIAL COURT’S EQUITY JURISDICTION.

Tatum sought to rescind and void the May 4, 2010 foreclosure sale.

Rescission is an equitable remedy that is used as a substitute for monetary damages

when such damages would not be adequate. Scott v. Sebree, 986 S.W.2d 364, 368

(Tex. App.–Austin 1999, pet. denied). Similarly, setting aside a trustee sale is an

6 equitable remedy which requires the mortgagor to make a valid tender of the

amount due to receive equity. Lambert v. First Nat'l Bank of Bowie, 993 S.W.2d

833, 835 (Tex.App.-Fort Worth 1999, pet. denied).

District Courts have jurisdiction over any cause of action that is cognizable

by courts of law or equity and may grant any relief that could be granted by courts

of law or courts of equity. TEX. GOV’T. CODE §24.008. District Courts have the

power to issue such writs as are necessary to enforce their jurisdiction. TEX.

CONST. ART. 5, §8. The trial court holds discretion as to whether to rescind a

foreclosure or grant other forms of equitable relief. Tex. Capital Secs., Inc. v.

Sandefer, 58 S.W.3d 760, 774 (Tex. App.–Houston [1st Dist.] 2001, pet. denied).

In making this determination, courts of equity are not bound by rigid rules but are

governed by flexible doctrines that allow courts to adopt remedies to particular

circumstances to prevent injustice. Hausman v. Hausman, 199 S.W.3d 38, 42

(Tex. App.–San Antonio 2006, no pet.); Warren v. Osborne, 154 S.W.2d 944, 946

(Tex. Civ. App.–Texarkana 1941, writ ref’d w.o.m.).

Tatum invoked the trial court’s equity jurisdiction. Having failed to pay his

mortgage for years, Tatum filed suit to (1) challenge Wells Fargo’s otherwise valid

foreclosure sale and (2) leverage some form of concession from Wells Fargo all the

while paying nothing to anyone. The trial court’s Adequate Protection Order

merely served to make Tatum abide by his legal obligation during the course of the

7 litigation. The Adequate Protection Order imposed no hardship on Tatum. The

Adequate Protection Order conferred no additional benefit on Wells Fargo of

Freddie Mac. The Adequate Protection Order merely served to prevent the unjust

enrichment that Tatum would enjoy while he lived rent-free and mortgage-free

during the course of this litigation. On these grounds, the Adequate Protection

Order is not an injunction. The Court should reconsider its finding that the

Adequate Protection Order acts an injunction.

PRAYER

Wells Fargo and Freddie Mac respectfully request that the Court of Appeals

(1) grant this Motion for Rehearing, (2) withdraw the portion of its current

Memorandum Opinion voiding and vacating the trial court’s Adequate Protection

Order, (3) affirm the trial court’s entry of the Adequate Protection Order, and (4)

grant Wells Fargo and Freddie Mac such other and further relief at law, and in

equity, as is just.

Respectfully submitted,

JOHNSON DELUCA KURISKY & GOULD A Professional Corporation

By: //s// George A. Kurisky, Jr. GEORGE A. KURISKY, JR. Texas State Bar No. 11767700 gkurisky@jdkglaw.com BRANCH M. SHEPPARD Texas State Bar No. 24033057 bsheppard@jdkglaw.com 8 4 Houston Center 1221 Lamar, Suite 1000 Houston, Texas 77010 (713) 652-2525 – Telephone (713) 652-5130 – Telecopy

ATTORNEYS FOR APPELLEES, WELLS FARGO BANK, N.A. AND FEDERAL NATIONAL MORTGAGE CORPORATION

CERTIFICATE OF COMPLIANCE

I hereby certify that this Motion for Rehearing complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it was prepared in a conventional typeface no smaller than 14-point for text and 12-point for footnotes. This document also complies with the word-count limitations of Tex. R. App. P. 9.4(i), if applicable, because it contains 1,950 words, excluding any parts exempted by Tex. R. App. P. 9.4(i)(1).

//s// George A. Kurisky, Jr. George A. Kurisky, Jr.

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing Motion for Rehearing was served via facsimile to all counsel of record on this, the 14th day of January, 2015, as follows:

Via Facsimile (281) 855-4580 J. NATHAN OVERSTREET J. NATHAN OVERSTREET & ASSOC., P.C. 8711 HIGHWAY 6, NORTH, SUITE #230 HOUSTON, TEXAS 77095