Mid Pac Portfolio, LLC v. Paula Welch, Clyde Alan Ashworth and Wells Fargo Bank, Minnesota, NA Formerly Known as Norwest Bank, Minnesota, NA, as Trustee for Salomon Brothers Mortgage Securities VII, Inc. Floating Rate Mortgage Pass Through Certificates Series 1999-LBI

• Court: Court of Appeals of Texas
• Decided: March 3, 2016
• Docket: 01-15-00404-CV
• Status: Published

Opinion

Opinion issued March 3, 2016

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-15-00404-CV ——————————— MID PAC PORTFOLIO, LLC, Appellant V. PAULA WELCH, CLYDE ALAN ASHWORTH, AND WELLS FARGO BANK, MINNESOTA, NA FORMERLY KNOWN AS NORWEST BANK, MINNESOTA, NA, AS TRUSTEE FOR SALOMON BROTHERS MORTGAGE SECURITIES VII, INC. FLOATING RATE MORTGAGE PASS THROUGH CERTIFICATES SERIES 1999-LBI, Appellees

On Appeal from the 405th District Court Galveston County, Texas Trial Court Case No. 13-CV-0422

MEMORANDUM OPINION

Mid Pac Portfolio, LLC filed suit against Paula Welch, Clyde Alan Ashworth,

Wells Fargo Bank, Minnesota, NA (“Wells Fargo Minnesota”), and Citigroup Global Markets Realty Corp. (“CGMRC”), seeking a judgment identifying it as the

owner of certain property. Welch and Ashworth counterclaimed, seeking a

judgment identifying them as the owners of the property. The trial court granted

Mid Pac’s motions for default judgment against Wells Fargo Minnesota and

CGMRC, denied Mid Pac’s motion for summary judgment against Welch and

Ashworth, and granted Welch and Ashworth’s motion for summary judgment

against Mid Pac. In five issues, Mid Pac argues (1) the trial court erred by ruling in

favor of Welch and Ashworth on both motions for summary judgment, (2) certain

statements in Welch’s affidavits were improper summary judgment evidence, (3) the

final judgment fails to identify that default judgment was rendered against Wells

Fargo Minnesota, and (4) the trial court erred in awarding attorneys’ fees to Welch

and Ashworth.

We modify the judgment and affirm as modified.

Background

In 1999, Welch and Ashworth executed a home equity note with Long Beach

Mortgage Company. Welsh and Ashworth secured the note with certain property

located in Santa Fe, Texas. That same year, Long Beach filed its first of many

attempts to foreclose on the property. In 2003, Long Beach entered into a settlement

agreement with Welch and Ashworth.

2 Under the terms of the settlement agreement, Welch and Ashworth had 90

days to secure other financing for the amount owed on the note. If they failed to

secure financing, the agreement included a signed deed in lieu of foreclosure, which

would be delivered to the holder of the note. The deed in lieu of foreclosure

identified the grantee as “Wells Fargo Bank Minnesota, NA., formerly known as

Norwest Bank Minnesota, NA, as Trustee for Salomon Brothers Mortgage Securities

VII, Inc., Floating Rate Mortgage Pass Through Certificates, series 1999-LB1.” The

parties agree that Welch and Ashworth did not secure financing within the required

time.

On March 14, 2013, Mid Pac recorded the deed in lieu of foreclosure in

Galveston County. Four days later, Mid Pac filed suit, seeking a judgment

identifying it as the owner of the property. Mid Pac sued Welch, Ashworth, Wells

Fargo Minnesota, and CGMRC. Wells Fargo Minnesota did not appear, and Mid

Pac obtained a default judgment against it. A vice president of CGMRC, James

Goddard, filed an affidavit making certain assertions concerning the property in

question. CGMRC did not have any further involvement in the suit, and Mid Pac

obtained a default judgment against it. Welch and Ashworth answered and asserted

a counter-claim, seeking a judgment identifying them as the owners of the property.

The remaining parties filed competing motions for summary judgment. Mid

Pac sought summary judgment on its declaratory action. Mid Pac argued that,

3 because it acquired the original deed in lieu of foreclosure from CGMRC and

because it had recorded the deeds in Galveston County, it had established as a matter

of law that it was the owner of the property. Mid Pac’s summary judgment evidence

consisted of an affidavit of one of its vice presidents, April Smith; the settlement

agreement between Long Beach and Welch and Ashworth; and the deed in lieu of

foreclosure, which reflected that it had been recorded in Galveston County. Smith’s

affidavit asserted, in part, that Mid Pac had acquired the deed in lieu of foreclosure

from CGMRC. Mid Pac also relied on Goddard’s affidavit, which asserted that

CGMRC “transferred it interest in the Paula Welch/Clyde Ashworth Deed in Lieu

to Mid Pac Portfolio, LLC as an REO (‘Real Estate Owned’) asset.”

Welch and Ashworth sought summary judgment on Mid Pac’s declaratory

action as well as on their own declaratory action. One ground presented in their

motion was a no-evidence motion for summary judgment, asserting that Mid Pac

could not prove that it was the successor-in-interest to the grantee of the deed in lieu

of foreclosure. Following a hearing on both motions, the trial court granted Welch

and Ashworth’s motion and denied Mid Pac’s motion.

Default Judgment

In its fourth issue, Mid Pac asserts the final judgment fails to identify that

default judgment was rendered against Wells Fargo Minnesota. The record reflects

that default judgments were rendered against Wells Fargo Minnesota and CGMRC.

4 The default judgment declared that “neither Wells Fargo nor [CGMRC] has any

right, title, or interest in the property.”

In contrast, the final judgment identified that the trial court was only declaring

default judgment against CGMRC. Other portions of the judgment, though, asserted

restrictions on claims Wells Fargo Minnesota could assert against the property.

Nothing in the record shows that the trial court withdrew the default judgment

against Wells Fargo Minnesota. “When we have the necessary information to do so,

we may correct clerical errors in the judgment.” In Interest of A.B., 458 S.W.3d 207,

210 (Tex. App.—Dallas 2015, pet. denied); see also TEX. R. APP. P. 43.2(b)

(authorizing courts of appeals to modify trial court’s judgment and affirm as

modified). Accordingly, we modify the judgment to reflect that a default judgment

was rendered against Wells Fargo Minnesota.

We sustain Mid Pac’s fourth issue.

Summary Judgment

In its first issue, Mid Pac argues the trial court erred by ruling in favor of

Welch and Ashworth on both motions for summary judgment.

A. Standard of Review

The summary-judgment movant must conclusively establish its right to

judgment as a matter of law. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.

1986). Because summary judgment is a question of law, we review a trial court’s

5 summary judgment decision de novo. See Mann Frankfort Stein & Lipp Advisors,

Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).

To prevail on a “traditional” summary-judgment motion asserted under Rule

166a(c), a movant must prove that there is no genuine issue regarding any material

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

Little v. Tex. Dep’t of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). A matter

is conclusively established if reasonable people could not differ as to the conclusion

to be drawn from the evidence. See City of Keller v. Wilson, 168 S.W.3d 802, 816

(Tex. 2005).

When it moves for summary judgment on a claim for which it bears the burden

of proof, a party must show that it is entitled to prevail on each element of its cause

of action. See Parker v. Dodge, 98 S.W.3d 297, 299 (Tex. App.—Houston [1st Dist.]

2003, no pet.). The party meets this burden if it produces evidence that would be

sufficient to support an instructed verdict at trial. Id.

After an adequate time for discovery, the party without the burden of proof

may move for a no-evidence summary judgment on the basis that there is no

evidence to support an essential element of the non-moving party’s claim. TEX. R.

CIV. P. 166a(i); Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008). Summary

judgment must be granted unless the non-movant produces competent summary

judgment evidence raising a genuine issue of material fact on the challenged

6 elements. TEX. R. CIV. P. 166a(i); Hamilton, 249 S.W.3d at 426. A non-moving

party is “not required to marshal its proof; its response need only point out evidence

that raises a fact issue on the challenged elements.” TEX. R. CIV. P. 166a (Notes &

Comments 1997).

A no-evidence summary judgment motion is essentially a motion for a pretrial

directed verdict. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581 (Tex. 2006).

Accordingly, we apply the same legal-sufficiency standard of review that we apply

when reviewing a directed verdict. City of Keller, 168 S.W.3d at 823. Applying

that standard, a no-evidence point will be sustained when (1) there is a complete

absence of evidence of a vital fact, (2) the court is barred by rules of law or evidence

from giving weight to the only evidence offered to prove a vital fact, (3) the evidence

offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence

conclusively establishes the opposite of a vital fact. King Ranch, Inc. v. Chapman,

118 S.W.3d 742, 751 (Tex. 2003); see also City of Keller, 168 S.W.3d at 810.

To determine whether there is a fact issue in a motion for summary judgment,

we review the evidence in the light most favorable to the non-movant, crediting

favorable evidence if reasonable jurors could do so, and disregarding contrary

evidence unless reasonable jurors could not. See Fielding, 289 S.W.3d at 848 (citing

City of Keller, 168 S.W.3d at 827). We indulge every reasonable inference and

7 resolve any doubts in the non-movant’s favor. Sw. Elec. Power Co. v. Grant, 73

S.W.3d 211, 215 (Tex. 2002).

When, as here, the parties file cross-motions for summary judgment on

overlapping issues, and the trial court grants one motion and denies the other, we

review the summary judgment evidence supporting both motions and “render the

judgment that the trial court should have rendered.” FM Props. Operating Co. v.

City of Austin, 22 S.W.3d 868, 872 (Tex. 2000).

B. Analysis

Before reviewing the propriety of summary judgment, we must determine the

claim that was asserted by Mid Pac. In its original petition, Mid Pac asserted a

declaratory judgment action as well as a trespass to try title action. In its brief on

Appeal, Mid Pac claims that it abandoned the trespass to try title action, “so it was

not at issue in the trial court.” This is not entirely correct.

Certain types of property disputes must be brought as trespass to try title

actions. See Martin v. Amerman, 133 S.W.3d 262, 264–65 (Tex. 2004); I-10 Colony,

Inc. v. Lee, 393 S.W.3d 467, 474–75 (Tex. App.—Houston [14th Dist.] 2012, pet.

denied); see also TEX. PROP. CODE ANN. § 22.001(a) (Vernon 2014) (“A trespass to

try title action is the method of determining title to lands, tenements, or other real

property.”). Failure to object to a trespass to try title action being brought as a

declaratory judgment action, however, waives the error. Washington v. Taylor, No.

8 01-08-00255-CV, 2010 WL 1571201, at *4 (Tex. App.—Houston [1st Dist.] Apr. 8,

2010, no pet.). The waiver, though, concerns matters such as awarding attorneys’

fees. See, e.g., Vernon v. Perrien, 390 S.W.3d 47, 62 (Tex. App.—El Paso 2012,

pet. denied); Buckingham v. McAfee, 393 S.W.3d 372, 376 (Tex. App.—Amarillo

2012, pet. denied).

Both parties asserted declaratory judgment actions, and neither objected to the

other’s use of the actions. Accordingly, even if the disputes between the parties

should have been brought as trespass to try title actions, any error in the form of the

action has been waived. This does not end the inquiry, however. “[A] litigant’s

couching its requested relief in terms of declaratory relief does not alter the

underlying nature of the suit.” Texas Parks & Wildlife Dept. v. Sawyer Trust, 354

S.W.3d 384, 388 (Tex. 2011); accord Vernon, 390 S.W.3d at 55. We must still

determine, then, the underlying nature of the suit.

Disputes based on claims of superior title are trespass to try title actions. See

PROP. CODE § 22.001(a); Martin, 133 S.W.3d at 267; I-10 Colony, 393 S.W.3d at

475. A trespass to try title action concerns “a determination of which party owned

title at a particular time.” I-10 Colony, 393 S.W.3d at 475; accord Wilhoite v. Sims,

401 S.W.3d 752, 760 (Tex. App.—Dallas 2013, no pet.) (holding claims to legal title

and possession of real property are trespass to try title actions). The entire thrust of

Mid Pac’s claim is that, by virtue of acquiring the deed in lieu of foreclosure from

9 CGMRC and recording the deed, it has title and right to possession of the property.

This is a trespass to try title action. See I-10 Colony, 393 S.W.3d at 475.

“To prevail in a trespass-to-try-title action, a plaintiff must usually (1) prove

a regular chain of conveyances from the sovereign, (2) establish superior title out of

a common source, (3) prove title by limitations, or (4) prove title by prior possession

coupled with proof that possession was not abandoned.” Martin, 133 S.W.3d at 265.

The plaintiff must “prevail on the superiority of his title, not on the weakness of a

defendant’s title.” Id.

Mid Pac’s claim of title is a claim of superior title out of a common source. It

identifies the title before the Long Beach settlement agreement as the common

source. A deed in lieu of foreclosure followed that title. Mid Pac asserted it obtained

title when it obtained the deed. In order to prevail on a claim of superior title out of

a common source, the plaintiff must show a complete chain of title for his claim

from the common source, connect the defendant’s title to the same source, and, in

the process, show the superiority of its claim to the defendant’s. Dames v. Strong,

659 S.W.2d 127, 131 (Tex. App.—Houston [14th Dist.] 1983, no writ).

Mid Pac failed to present evidence of a complete chain of title. Mid Pac

presented some evidence that Welch and Ashworth conveyed legal title in the

property to Wells Fargo Minnesota. It also presented some evidence that CGMRC

conveyed legal title to Mid Pac. However, there is no evidence in the record

10 establishing that CGMRC possessed any legal title in the property to convey to Mid

Pac. There is no indication in the record establishing any conveyance or series of

conveyances from Wells Fargo Minnesota to CGMRC.

Mid Pac claims at trial and on appeal that it proved it had legal title to the

property by proving that it possessed the original copy of the deed in lieu of

foreclosure. This is incorrect. A deed in lieu of foreclosure is not a special type of

deed with any added benefits for possession of the original. See Flag-Redfern Oil

Co. v. Humble Exploration Co., Inc., 744 S.W.2d 6, 8 (Tex. 1987) (“There is no such

deed as a deed in lieu of foreclosure.”). Instead, it functions as a typical deed to

convey legal title in real property from the grantor to the grantee. See id. (holding

deed in lieu of foreclosure at issue conveyed legal title possessed by grantor, the

Scotts, to the grantee, Kocurek). “When a grantor transfers property, title to the

property vests in the grantee upon execution and delivery of the deed conveying the

property.” Watson v. Tipton, 274 S.W.3d 791, 799 (Tex. App.—Fort Worth 2008,

pet. denied) (emphasis added). At most, proof of the original deed in lieu of

foreclosure in this case is proof that Welch and Ashworth conveyed the property to

Wells Fargo Minnesota. It is no evidence, in itself, that Mid Pac possesses legal title

to the property.

Mid Pac also relies on the fact that Wells Fargo Minnesota and CGMRC did

not participate in the suit and that it obtained default judgments against them. As

11 the trial court’s judgment reflects, this serves as proof that Wells Fargo Minnesota

and CGMRC relinquished their right to assert any title in the property in this dispute.

This does not prove, however, that there is a chain of title from Welch and Ashworth

to Mid Pac.

Mid Pac failed to establish that there was a chain of title from Welch and

Ashworth to it for the property in question. Accordingly, it did not establish as a

matter of law that it was entitled to summary judgment on its declaratory judgment

(trespass to try title) action. We hold the trial court did not err in denying Mid Pac’s

motion. For the same reason, Welch and Ashworth prevailed on their ground that

Mid Pac had no evidence that it held title in the property. We hold the trial court did

not err in granting Welch and Ashworth’s motion for summary judgment against

Mid Pac.

We overrule Mid Pac’s first issue.

Remaining Issues

Mid Pac argues in its second and third issues that certain statements in

Welch’s affidavits were improper summary judgment evidence. Because we have

not relied on the challenged statements in our review, we do not need to reach these

issues. See TEX. R. APP. P. 47.1. Mid Pac’s fifth issue concerns the trial court’s

award of attorneys’ fees against it. This issue, however, is expressly conditioned on

12 Mid Pac’s prevailing on its first issue. Because Mid Pac has not prevailed on its first

issue, we do not reach this issue.

Conclusion

We modify the judgment to reflect that default judgment was rendered against

Wells Fargo Minnesota. We affirm the judgment of the trial court as modified.

Laura Carter Higley Justice

Panel consists of Justices Higley, Huddle, and Lloyd.