Kourosh Hemyari v. Stephens

355 S.W.3d 623, 55 Tex. Sup. Ct. J. 59, 2011 Tex. LEXIS 807, 2011 WL 5042017
Texas Supreme Court·Decided October 21, 2011·No. No. 10-0389·Published·Cited by 63 cases

Opinion

PER CURIAM.

In this case we are called upon to decide whether a foreclosure sale violated the automatic stay attendant to all bankruptcy proceedings. James Murphy, pursuant to a bankruptcy court order authorizing the sale of property owned by the Stephens Groups on August 1, 2000, foreclosed on a deed of trust and posted the property for sale on September 5, 2000. Some five years later, the Stephens Groups challenged the sale on the grounds that it violated the automatic stay. The court of appeals agreed, concluding that the violation made the foreclosure void. Because we conclude that the order permitted a sale on or after August 1, 2000, we reverse the court of appeals’ judgment without hearing oral argument, pursuant to Texas Rule of Appellate Procedure 59.1.

In the 1990s, Stephens Group, L.P. and Stephens Group II, L.P. (collectively “Stephens Groups”) purchased three tracts of land in Dallas County. Gary Ben Stephens was the general partner, and James Murphy was the limited partner. In 1997, Murphy agreed to sell his interest in the property to the Stephens Groups. The agreement called for the Stephens Groups to provide Murphy with the initial sum of $50,000, then an additional sum of $700,000 within 120 days. The Stephens Groups’ obligation to pay $700,000 was secured by a deed of trust and a deed in lieu of foreclosure. The Stephens Groups satisfied the initial payment required, but failed to make the $700,000 payment.

When Murphy threatened to foreclose on the deed of trust, the Stephens Groups sought bankruptcy protection. The bankruptcy court entered an order in which it established a procedure for the Stephens Groups to fulfill its original obligations. The order provided that the Stephens Groups were to make payment of $50,000 to Murphy by June 12, 2000, which they did. The order further provided that, after the initial payment, a conditional lift of the automatic stay would “allow [Murphy] to post the property for foreclosure in July, 2000, for a sale on August 1, 2000.” Finally, the order provided that if the Stephens Groups did not pay the remaining $650,000 on or before August 1, Murphy could “proceed with the foreclosure sale on August 1, 2000.” Murphy did not schedule [626] the foreclosure sale in July, as allowed by the order, but waited until after the Stephens Groups missed the second payment to schedule the sale for September 5, 2000.

Kourosh Hemyari purchased the property at the foreclosure sale, and Philip and David Huffines, through a limited partnership named Union Valley Ranch, L.P., later purchased two-thirds of the property from Hemyari. Following the foreclosure sale, the proceeds were used to complete the payment to Murphy, and the Stephens Groups moved to dismiss their bankruptcy case, having discharged their debts. Four years later, the Stephens Groups filed this suit in state court. The Stephens Groups asserted violations of the Texas Property Code’s foreclosure requirements, such as the trustee’s deed’s alleged misidentification of the grantor. One year later, the Stephens Groups amended their petition to allege that the foreclosure sale, which took place on September 5, 2000, was void because it violated the express terms of the bankruptcy court’s order temporarily lifting the stay. Hemyari subsequently moved for, and was granted, summary judgment.

The court of appeals, based on its conclusion that Hemyari failed to conclusively show the validity of the foreclosure sale, reversed and remanded. Stephens v. Hemyari, 216 S.W.3d 526, 529 (Tex.App.-Dallas 2007, pet. denied). But that court did not address whether the foreclosure sale was, as the Stephens Groups contend, void as a matter of law. On remand, the trial court again granted Hemyari’s and now intervenor Union Valley’s motions for summary judgment, and this time denied a cross motion by the Stephens Groups for summary judgment on the ground that the sale was void as a matter of law. The court of appeals again reversed the trial court’s summary judgment, based on its interpretation of the bankruptcy court’s order: “[W]e believe the clear language of the order unambiguously modified the stay to allow for a sale only on August 1, 2000.” 355 S.W.3d at 13. The court rendered judgment for the Stephens Groups. Id. at 15. Hemyari and Union Valley Ranch raise a number of arguments challenging the court of appeals’ decision, including judicial estoppel and other equitable principles. Because we conclude that the foreclosure sale did not violate the automatic stay, we do not reach those arguments.

The basis for the Stephens Groups’ challenge to the foreclosure sale is the language contained in the bankruptcy court’s order conditionally terminating the automatic stay. Just as with an unambiguous contract, we enforce unambiguous orders literally. Reiss v. Reiss, 118 S.W.3d 439, 441-42 (Tex.2003). Only where an order’s terms are ambiguous — that is, susceptible of more than one reasonable interpretation — do we look to the surrounding circumstances to discern their meaning. Lone Star Cement Corp. v. Fair, 467 S.W.2d 402, 404-05 (Tex.1971). The Stephens Groups argue, and the court of appeals concluded, that the bankruptcy court’s order was not ambiguous because it expressly provided for a sale “on August 1, 2000.” See Stephens, 355 S.W.3d at 13. The Stephens Groups contend that, because it is unambiguous, we may give no meaning to the words “on August 1, 2000” other than that the foreclosure sale could occur only on August 1st. But even a “literal” interpretation of an unambiguous order requires us to look at the order as a whole. See Reiss, 118 S.W.3d at 441. If possible, we construe an order in a way that gives each provision meaning. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 422 (Tex.2000). Furthermore, under general rules of construction we avoid strictly construing an instrument’s language if it would lead to absurd results. [627] See Transcon. Ins. Co. v. Crump, 330 S.W.3d 211, 227 (Tex.2010) (stating the rule in the context of statutory interpretation).

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Kourosh Hemyari v. Stephens, 355 S.W.3d 623, 55 Tex. Sup. Ct. J. 59, 2011 Tex. LEXIS 807, 2011 WL 5042017 (Tex. 2011).

355 S.W.3d 623 (Kourosh Hemyari v. Stephens) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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