Juan Hernandez and Maria Hernandez v. MERS and Household Finance Corporation III, U.S. Bank Trust, N.A. as Trustee for LSF8 Master Participation Trust and Caliber Homes Loan, Inc.

Opinion

Opinion issued October 22, 2019

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-18-00468-CV ——————————— JUAN HERNANDEZ AND MARIA HERNANDEZ, Appellants V. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., HOUSEHOLD FINANCE CORPORATION III, U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF8 MASTER PARTICIPATION TRUST, AND CALIBER HOMES LOAN, INC., Appellees

On Appeal from the 133rd District Court Harris County, Texas Trial Court Case No. 2015-32570

MEMORANDUM OPINION

This appeal challenges a trial court’s dismissal of Juan Hernandez and Maria

Hernandez’s claims asserted against a lender, its predecessors-in-interest, and its

loan servicer. The controversy stems from the Hernandezes’ home-equity loan and their failure to make the required payments on the loan. We find jurisdiction to

review, and we affirm both orders from which the Hernandezes appeal.

Background

This dispute has a long and torturous history, starting out in state court, then

removal and remand, continuing with a flood of motions in the district court, and

ending with summary judgment.

Juan Hernandez and Maria Hernandez took out a $145,600 home-equity loan

from Town and Country Credit Corporation in 2004. To secure repayment, the

Hernandezes signed a deed of trust along with the note. The deed of trust granted

Town and Country a first-lien security interest in the Hernandezes’ home. Town

and Country then assigned the note and deed of trust to Ameriquest Mortgage

Company, 1 which later assigned the note and deed of trust to Mortgage Electronic

Registration Systems, Inc. (“MERS”). MERS eventually assigned the loan to

Household Finance Corporation III (“HFC”).

In 2011, the Hernandezes defaulted on their monthly loan payments. After

satisfying the statutory notice and other procedural requirements, HFC obtained a

court order authorizing foreclosure on the property. U.S. Bank Trust, N.A., as

Trustee for LSF8 Master Participation Trust (“U.S. Bank Trust”), bought the

property at a foreclosure auction in 2015. HFC then assigned the note and deed of

1 Ameriquest Mortgage Company is not a party to this appeal.

2 trust to U.S. Bank Trust. Caliber Home Loans, Inc. (“Caliber”) was servicer of the

note and deed of trust at all times relevant to the foreclosure sale and the notices of

the sale.

U.S. Bank Trust gave notice to the Hernandezes to surrender possession of

the property. The Hernandezes did not surrender possession, and U.S. Bank Trust

filed a forcible detainer action in justice court to evict them from the property. The

justice court issued an order to evict the Hernandezes in 2015.

The Hernandezes appealed the justice court’s eviction order to the county

court, and the county court ruled that U.S. Bank Trust was entitled to immediate

possession of the property and to a writ of possession if the Hernandezes failed to

vacate the premises within one week.

Without complying with this possession order, the Hernandezes then sued

U.S. Bank Trust, Caliber, HFC, and MERS in state district court2 and alleged the

following claims: (1) violation of the Texas Civil Practice and Remedies Code

section 12.002 (addressing liability related to use of fraudulent court record or lien

or claim against property); (2) violation of the Texas Penal Code sections 32.21

(defining criminal forgery) and 32.47 (prohibiting fraudulent destruction, removal,

2 The Hernandezes also named Town and Country Credit Corp., U.S. Bank Trust, as Trustee for the Household Home Equity Loan Trust 2004-1, HFC Revolving Corporation, and Ameriquest Mortgage Company as defendants. However, these entities are not parties to this appeal.

3 or concealment of writing); (3) negligence per se; (4) gross negligence; (5) lack of

standing to foreclose; (6) statutory fraud; (7) violation of the Truth in Lending Act;

(8) violation of the Texas Constitution article XVI, section 50(a)(6)(D); (9)

violation of the Texas Property Code § 51.0075(e); (10) for declaratory relief; (11)

to quiet title; and (12) “breach of contract/lack of contractual standing.”

U.S. Bank Trust, MERS, and Caliber removed the case to federal court on

federal question jurisdiction (the Truth in Lending Act claim). Caliber and U.S.

Bank Trust moved for summary judgment. In September 2016, the federal district

court granted Caliber and U.S. Bank Trust’s motion for summary judgment and

disposed of the claims for lack of standing to foreclose, statutory fraud, the Truth

in Lending Act, the Texas Constitution article XVI, section 50(a)(6)(D), Texas

Property Code section 51.0075(e), declaratory relief, quiet title, and breach of

contract/lack of standing. The federal court held that U.S. Bank Trust had standing

to foreclose and “establish[ed] it is the proper holder of the note and deed of trust”

and that the Hernandezes lacked standing to challenge the assignments.

The Hernandezes filed a motion for leave to amend their complaint and a

motion for remand, both seeking to non-suit the violation of the Truth in Lending

Act claim against all parties. In January 2017, the magistrate judge filed a report

and recommendation denying supplemental jurisdiction over the remaining state

law claims and remanding the Hernandezes’s remaining claims to state court. The

4 magistrate judge also recommended denying the other pending motions without

prejudice to being asserted in state court upon remand. The district court signed an

order adopting the recommendations, dismissing the Truth in Lending Act claim

against Caliber, HFC, MERS, and U.S. Bank Trust, and remanded the case to state

court.3 The Hernandezes did not appeal that order.4

On remand, the Hernandezes filed a third amended petition and added

several new causes of action against MERS and HFC, and one additional claim

against Caliber and U.S. Bank Trust.

MERS and HFC then filed a traditional and no-evidence motion for

summary judgment in the trial court. They raised the affirmative defenses of res

judicata and collateral estoppel to bar relitigation of all claims asserted against

them. Similarly, Caliber and U.S. Bank Trust filed a traditional and no-evidence

summary-judgment motion, requesting dismissal of remaining claims that were not

3 The remaining state law claims against Caliber and U.S. Bank Trust include the following: violation of the Texas Civil Practice and Remedies Code section 12.002, violation of the Texas Penal Code sections 32.21 and 32.47, negligence per se, and gross negligence. 4 The order became final and not subject to appeal because the Hernandezes failed to timely appeal the order. See FED. R. APP. P. 4(a)(1) (prescribing thirty-day period to file notice of appeal); see also HDW2000 256 E. 49th St. v. City of Houston, No. 01-12-00053-CV, 2012 WL 6095226, at *10 (Tex. App.—Houston [1st Dist.] Dec. 6, 2012, pet. denied) (mem. op.) (citations omitted) (“A federal district court’s grant of summary judgment on all federal claims and remand of all remaining state law claims in a partial-summary judgment is an appealable final order because there is nothing left for the federal court to decide.”).

5 dismissed in the federal court proceedings. They argued that these remaining

claims were barred by res judicata and collateral estoppel.

In April 2018, the district court granted both motions for summary judgment

without specifying the grounds relied on for its rulings and issued two orders

disposing of all parties and claims—one reflecting that it was a partial judgment

and the other order stating it was a final judgment. The Hernandezes appeal from

both summary judgment orders.

DISCUSSION

A. Finality

We first determine the extent of our jurisdiction over the rulings that the

Hernandezes appeal. MERS and HFC assert that the Hernandezes prematurely

filed this appeal because no final judgment has been rendered and request that we

abate to allow the district court to clarify its orders. Caliber and U.S. Bank Trust

disagree. They contend that the trial court entered a final judgment, disposing of all

claims and all parties.

Absent certain statutory exceptions that do not apply to this case, appeals

may only be taken from a final judgment. See Lehmann v. Har-Con Corp., 39

S.W.3d 191, 195 (Tex. 2001); but see TEX. CIV. PRAC. & REM. CODE § 51.014

(permitting, in some cases, interlocutory appeals from orders disposing of specified

claims and issues). When, as here, “there has not been a conventional trial on the

6 merits, an order or judgment is not final for purposes of appeal unless it actually

disposes of every pending claim and party or unless it clearly and unequivocally

states that it finally disposes of all claims and all parties.” Lehmann, 39 S.W.3d at

205. A review of the record determines whether an order disposes of all pending

claims and parties. Id. at 205–06.

In the trial court, Caliber and U.S. Bank Trust moved for traditional and no-

evidence summary judgment, asserting res judicata and collateral estoppel

affirmative defenses against the Hernandezes’s claims. The underlying issue on

which the Hernandezes based their claims—the deed assignments—was already

litigated in federal court. The trial court granted summary judgment and entered an

order stating that it is a “partial judgment.” The trial court granted Caliber and U.S.

Bank Trust’s summary judgment motion “on all grounds” and ordered that the

Hernandezes “take nothing on all of their claims” against Caliber and U.S. Bank

Trust. MERS and HFC also moved for traditional and no-evidence summary

judgment on all claims asserted by the Hernandezes. They argued that res judicata

and collateral estoppel barred litigation of their claims and requested “an order . . .

disposing of all causes of action asserted against” them based on res judicata and

collateral estoppel. The trial court subsequently granted MERS and HFC’s motion

for summary judgment. The order expressly stated, “This Order resolves all claims

between all parties, and therefore the Court hereby renders FINAL

7 JUDGMENT.” Because this order unequivocally states that it “disposes of all

claims and all parties,” this order is a final judgment. Lehmann, 39 S.W.3d at 200

(“A judgment that actually disposes of every remaining issue in a case is not

interlocutory merely because it recites that it is partial or refers to only some of the

parties or claims. Thus, if a court has dismissed all of the claims in a case but one,

an order determining the last claim is final.”).

For these reasons, the record shows the combination of both orders creates a

final and appealable judgment and we have appellate jurisdiction.

B. Standard of review

We review summary judgments de novo. Godoy v. Wells Fargo Bank, N.A.,

575 S.W.3d 531, 536 (Tex. 2019). When, as here, the trial court grants summary

judgment without specifying the grounds for granting the motion, we must affirm

its judgment if any one of the grounds is meritorious. Browning v. Prostok, 165

S.W.3d 336, 344 (Tex. 2005). In reviewing the grounds for 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. Sommers for Ala. &

Dunlavy, Ltd. v. Sandcastle Homes, 521 S.W.3d 749, 754 (Tex. 2017). When the

trial court does not specify the grounds for granting the motion, as is the case here,

we must uphold the judgment if any of the grounds asserted in the motion and

preserved for appellate review are meritorious. Merriman v. XTO Energy, Inc., 407

8 S.W.3d 244, 248 (Tex. 2013). If the appellant fails to challenge all possible

grounds, we must accept the validity of the unchallenged grounds and affirm the

adverse ruling. Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970)

(“The judgment must stand, since it may have been based on a ground not

specifically challenged by the plaintiff and since there was no general assignment

that the trial court erred in granting summary judgment.”); see, e.g., Taylor v.

CenterPoint Energy Houston Elec., LLC, No. 01-16-00466-CV, 2017 WL

1536266, at *1 (Tex. App.—Houston [1st Dist.] Apr. 27, 2017, no pet.) (mem. op.)

(applying Malooly Bros., Inc. and affirming summary judgment because appellant

failed to brief each independent ground for summary judgment alleged in the

motion).

A party seeking summary judgment may move for both traditional and no-

evidence summary judgment. TEX. R. CIV. P. 166a(c), (i); see Binur v. Jacobo,

135 S.W.3d 646, 650 (Tex. 2004). When a party has sought summary judgment on

both grounds, we typically first review the no-evidence grounds. See Merriman,

407 S.W.3d at 248. We will not address the traditional motion if we determine the

trial court properly granted the no-evidence summary-judgment motion on the

same claims. See Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520 S.W.3d

39, 45 (Tex. 2017).

9 On the no-evidence grounds, the movant bears the burden to specifically

identify one or more elements for which there is no evidence. TEX. R. CIV. P.

166a(i); see Cmty. Health Sys. Prof’l Services Corp. v. Hansen, 525 S.W.3d 671,

695–96 (Tex. 2017). The burden then shifts to the nonmovant to present more than

a scintilla of evidence raising a genuine issue of material fact as to each challenged

element. Lightning Oil Co., 520 S.W.3d at 45. On the traditional grounds, the

movant bears the burden to show that no genuine issue of material fact exists and

that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); see City of

Richardson v. Oncor Elec. Delivery Co. LLC, 539 S.W.3d 252, 259–60 (Tex.

2018). To meet this burden, the movant must conclusively negate at least one

essential element of each of the nonmovant’s causes of action or conclusively

prove all the elements of an affirmative defense. KCM Fin. LLC v. Bradshaw, 457

S.W.3d 70, 79 (Tex. 2015) (citing TEX. R. CIV. P. 166a(c)).

C. Whether failure to challenge all possible grounds bars review of merits of all claims

On remand, the Hernandezes asserted their claims against MERS and HFC,

contesting the assignments of the note and deed of trust. MERS and HFC moved

for summary judgment on all claims asserted by the Hernandezes on the grounds of

res judicata and collateral estoppel. Specifically, they argued that res judicata and

collateral estoppel barred relitigation of all claims because the federal court had

already determined the Hernandezes do not have standing to challenge the

10 assignments and because the evidence revealed that there was a sufficient chain of

title. MERS and HFC also attacked specific elements of each claim and asserted

that the Hernandezes did not present evidence for the elements.

Similarly, the Hernandezes asserted their claims against Caliber and U.S.

Bank trust, challenging the assignments of the note and deed of trust. Caliber and

U.S. Bank Trust also filed traditional and no-evidence summary judgment motions

and asserted two affirmative defenses against these claims: res judicata and

collateral estoppel. Caliber and U.S. Bank Trust specifically argued that the federal

court dismissed several of the Hernandezes’s claims in federal court and res

judicata and collateral estoppel barred relitigation of the remaining claims because

of the court’s holding that “established standing to foreclose by both an unbroken

chain of recorded assignments and . . . [its]holding the [n]ote [was] indorsed in

blank at all relevant times.” The court, more importantly, held that the

Hernandezes lacked standing to challenge the assignments. Caliber and U.S. Bank

Trust challenged each element of the remaining claims asserted by the

Hernandezes, asserting no evidence existed for certain elements.

Neither order granting summary judgment specified the particular grounds

on which it was rendered; therefore, the Hernandezes must defeat every ground

11 raised by the motion.5 See Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex.

1995) (citing Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989)). The

Hernandezes do not do so here.

In order to negate each possible ground, the Hernandezes must comply with

the Rules of Appellate Procedure and present arguments and supporting authority

to merit reversal. TEX. R. APP. P. 38.1(h) (requiring that appellant’s brief contain

clear, concise argument for contentions asserted); TEX. R. APP. P. 38.1(f) (requiring

that appellant’s brief state all issues and points presented for review; further

requiring that this Court consider statement of issue “as covering every subsidiary

question that is fairly included”); see Klentzman v. Brady, 312 S.W.3d 886, 899

(Tex. App.—Houston [1st Dist.] 2009, no pet.) (“Although we recognize that such

a broad [Malooly] issue is authorized, an appellant must nevertheless also present

argument and supporting authorities in support of that issue.”).

The Hernandezes failed to address res judicata and collateral estoppel. These

defenses were discussed at length in each summary-judgment motion. The

Hernandezes not only do not discuss the defenses, they omit any discussion of this

case’s removal to federal court or the orders issued by that court before remand.

Indeed, the Hernandezes’ brief repeats nearly word for word the arguments raised

5 An appellant may also assert a general complaint that the trial court erred in granting summary judgment. See Malooly Bros. Inc., 461 S.W.2d at 121. The Hernandezes, however, make no such assertion. 12 in their original petition (and subsequent amendments) without regard to the

federal action on which the defenses are based. Nowhere in their brief do they

expressly or implicitly challenge the defenses of res judicata or collateral estoppel

as independent, alternative grounds upon which the trial court could have based its

decision to grant summary judgment in favor of MERS, HFC, Caliber, and U.S.

Bank Trust. Moreover, the Hernandezes offer no legal analysis, argument, citations

to the record, nor any authorities that would support a conclusion that their claims

are not barred by collateral estoppel or res judicata. See TEX. R. APP. P. 38.1(h).

Because the trial court could have granted summary judgment on the basis

that the Hernandezes’s claims were barred by either res judicata or collateral

estoppel, and the Hernandezes did not brief either ground, we must accept the

validity of the unchallenged grounds and affirm the summary judgment. See

Malooly Bros., Inc. v. Napier, 461 S.W.2d at 121; McIntyre v. Wilson, 50 S.W.3d

674, 681–82 (Tex. App.—Dallas 2001, pet. denied) (upholding summary judgment

because trial court could have granted summary judgment on ground that appellant

did not challenge or discuss); Iglesia Hispana Nueva Vida Houston, Inc. v. Rosin,

No. 01–06–00048–CV, 2007 WL 1633723, at *3 (Tex. App.—Houston [1st Dist.]

June 7, 2007, no pet.) (mem. op.) (affirming summary judgment on collateral

estoppel because appellant did not address it as possible ground for trial court’s

summary-judgment ruling).

13 Under these circumstances, we need not consider the arguments in support

of the Hernandezes’s various issues challenging the trial court’s summary

judgment orders because we must affirm the trial court’s decision to grant

summary judgment in favor of MERS, HFC, Caliber, and U.S. Bank Trust on the

unchallenged grounds of res judicata and collateral estoppel.

Conclusion

We affirm the judgment of the trial court.

Sarah Beth Landau Justice

Panel consists of Justices Lloyd, Goodman, and Landau.