Roger Tarrant, Denise Tarrant, Justin Tarrant and the D.A. Tarrant Irrevocable Trust v. Daniel Scarbrough

• Court: Court of Appeals of Texas
• Decided: July 31, 2017
• Docket: 12-17-00125-CV
• Status: Published

Opinion

ACCEPTED 12-17-00125-CV TWELFTH COURT OF APPEALS TYLER, TEXAS 7/31/2017 3:13 PM Pam Estes CLERK

No. 12-17-00125-CV _____________ FILED IN 12th COURT OF APPEALS TYLER, TEXAS 7/31/2017 3:13:07 PM In the Twelfth Court of Appeals PAM ESTES Tyler, Texas Clerk

_____________

Roger Tarrant, et al, Appellants

v.

Daniel Scarbrough, Appellee.

Appellants’ Brief _____________

Gregory D. Smith Jim Echols Bar No. 18600600 Bar No. 06391500 SMITH LEGAL PLLC SAUNDERS, SCHMIDT 110 N. College Ave., Suite 1120 & ECHOLS, P. C. Tyler, TX 75702 202 W. Erwin Street, Suite 200 Telephone: (903) 630-7165 Tyler, TX 75702 Facsimile: (903) 609-3077 Telephone: (903) 595-3791 greg@smithlegaltx.com Facsimile: (903) 595-3796 j.m.echols@att.net

Attorneys for Appellants Identity of Parties

Appellants: Roger Tarrant Denise Tarrant Justin Tarrant D. A. Tarrant Irrevocable Trust

Counsel for Appellants: Gregory D. Smith Bar No. 18600600 SMITH LEGAL PLLC 110 N. College Ave., Suite 1120 Tyler, TX 75702 Telephone: (903) 630-7165 Facsimile: (903) 609-3077 greg@smithlegaltx.com

Jim Echols Bar No. 06391500 SAUNDERS, SCHMIDT & ECHOLS, P.C. 202 W. Erwin Street, Suite 200 Tyler, TX 75702 Telephone: (903) 595-3791 Facsimile: (903) 595-3796 j.m.echols@att.net

Appellee-Plaintiff: Daniel Scarbrough

Counsel for Appellee: Jeffrey L. Coe Bar No. 24001902 1000 N. Church St. P. O. Box 1157 Palestine, TX 75082-1157 (903) 723-0331 (888) 651-6851 (fax) jeff@coelawfirm.com Contents

Table of Authorities ii Statement of the Case 1 Statement of Facts 2 Issues 5 Summary of Argument 6 Argument: I. Because Scarbrough failed to prove his case, the post-answer default judgment should be reversed and the cause remanded for a new trial. 7

A. Scarbrough needed to present legally- and factually-sufficient evidence proving the elements of a fraudulent transfer. 8

B. Scarbrough failed to prove the fraudulent-transfer elements, but instead testified to legal “positions” and speculative “beliefs.” 9

II. Because the Tarrants lacked notice of the actual trial, due process 13 requires a new trial.

III. Because the record omits to prove adequate notice of even the initial setting, the Tarrants have been deprived of their ability to show harm. 17 Conclusion and Prayer 19 Certificate of Service 21 Certificate of Compliance 21 Appendices: A. Judgment B. Notice of Setting

i Authorities

In re $475,001.16, 96 S.W.3d 625 (Tex. App.—Houston [1st Dist.] 2002, no pet.) 15 Armstrong v. Manzo, 380 U.S. 545 (1965) 17 Bennett v. McDaniel, 295 S.W.3d 644 (Tex. 2009) 13 City of Keller v. Wilson, 168 S.W.2d 802 (Tex. 2005) 8 City of San Antonio v. Pollock, 284 S.W.3d 809 (Tex. 2009) 13 Continental Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444 (Tex. 1996) 13 Cox v. Cox, 298 S.W.3d 726 (Tex. App.—Austin 2009, no pet.) 19 Davis v. Berger, 2000 Tex. App. LEXIS 448 (Tex. App.—Dallas 2000, no pet.) 7 Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922 (Tex. 2009) 16 Ed Rachal Found. v. D’Unger, 117 S.W.3d 348 (Tex. App.—Corpus Christi 2003) 13 Green v. McAdams, 857 S.W.2d 816 (Tex. App.—Houston [1st Dist.] 1993, no writ) 14 LBL Oil Co. v. Int’l Power Servs., Inc., 777 S.W.2d 390 (Tex. 1989) 13 Lopez v. Lopez, 757 S.W.2d 721 (Tex. 1988) 15 Maldonado v. Puente, 694 S.W.2d 86 (Tex. App.—San Antonio 1985, no writ) 7 Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402 (Tex. 1998) 8 Mathis v. Lockwood, 166 S.W.3d 743 (Tex. 2005) (per curiam) 18 Naan Props., LLC v. Affordable Power, LP, 2012 Tex. App. LEXIS 271 (Tex. App.—Houston [1st Dist.] 2012, no pet) 19

Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d 177 (Tex. 2012) 7 Peralta v. Heights Medical Center, Inc., 485 U.S. 80 (1988) 15 Roberson v. Robinson, 768 S.W.2d 280 (Tex. 1989) 7

ii Sammons v. Elder, 940 S.W.2d 276 (Tex. App.—Waco 1997, writ denied) 7 Tilton v. Marshall, 925 S.W.2d 672 (Tex. 1996) 8 Williams v. Houston Plants & Garden World, Inc., 508 B. R. 11 (S. D. Tex. 2014) 10 Wilson v. Indus. Leasing Corp., 689 S.W.2d 496 (Tex. App.—Houston [1st Dist.] 1985, no writ) 18 Worthen v. Glatzer, 1999 Tex. App. LEXIS 1913 (Tex. App.—Dallas 1999, no writ) 14 TEX. BUS. & COM. CODE ANN. § 24.005 10 TEX. BUS. & COM. CODE ANN. § 24.005(a)(1) 9 TEX. LAWYER’S CREED - A MANDATE FOR PROFESSIONALISM, III (11) 16 TEX. R. CIV. P. 245 14 Calvert, “No Evidence” and “Insufficient Evidence” Points of Error, 38 TEX. L. REV. 361 (1960) 12

iii To the Honorable Court of Appeals:

The judgment below cannot stand because, first, it is not supported by factually

sufficient proof and, second, the defendants did not have adequate and reasonable

notice of the trial session, in violation of due process.

Statement of the Case Nature of the Case Suit to set aside a real-property conveyance. Plaintiff Scarbrough alleged it was a fraudulent transfer as defined in the Texas Uniform Fraudulent Transfer Act. Trial Court Honorable Mark Calhoon, 3rd Judicial District Court Course of Proceedings Bench trial. A hearing was set for 11 a.m. on January 6. The defendants, who had previously answered, CR 39, did not appear. RR 4. Nor did plaintiff’s counsel. Id. The court thus reset the case for a “prove up” trial, later that day, at which plaintiff’s counsel appeared by telephone. Id. After a trial spanning all of ten reported pages (including testimony on remedies and attorney’s fees), RR 4- 13, the trial court entered a “default judgment” finding a fraudulent transfer and setting aside the challenged conveyance. App. A. While the judgment recites that the defendants were “provided due notice,” App. A, the trial transcript shows only that the court took judicial notice of its file, which reflected no attempt at notifying defense counsel of the prove-up hearing or offer to let him attend that hearing by telephone. Upon learning of the judgment, the defendants (collectively, the Tarrants) filed a motion for new trial broadly asserting lack of notice and requesting a hearing. CR 65-66. The motion was overruled by operation of law, without a hearing.

1 Statement of Facts

General Background. Daniel Scarbrough is an attorney practicing in Anderson

County. Roger and Denise Tarrant, who live in Anderson County, hired Mr. Scarbrough

to defend one of their sons against a felony criminal case. Scarbrough was paid a

substantial sum of money. He won an acquittal. Afterwards, Scarbrough and Mr. and

Mrs. Tarrant disputed whether Scarbrough was owed additional monies for his legal

work.

Scarbrough sued to collect the disputed fees. As that collection suit was

approaching trial, Roger and Denise, needing funds for their defense, entered a

transaction wherein their adult son, Justin (not the son whom Scarbrough had defended

against the criminal charges) would borrow funds from an existing spendthrift family

trust established by Denise’s parents and would buy Roger’s real property. The sales

consideration, as recited in the warranty deed, included not only the cash proceeds of

this loan but Justin’s assumption of two existing loans against the property and his

agreement to indemnify Roger against any claims made on the assumed loans. CR 43-

44. The sale closed after the verdict was entered in Scarbrough’s collection suit.

(Scarbrough recovered about $115,000 in that suit, including the debt and attorney’s

fees. RR Ex. A.) Scarbrough then sued Roger, Denise, Justin and the family trust (the

D. A. Tarrant Irrevocable Trust), to set aside the conveyance.

The Evidence at Trial. The evidence, fairly stated, was that Roger Tarrant

owned an undivided interest in the tracts of land described in Trial Exhibit B, a warranty 2 deed. RR 7. On November 21, 2014, he deeded that land to Justin, who signed a deed

of trust in favor of the D. A. Tarrant Irrevocable Trust. RR 8. The deed of trust indicates

that Justin borrowed $52,325 from the trust. RR 8.

At this point in the trial—page 8 of the transcript—the probative evidence stops

and surmise take over. The remaining material testimony was as follows:

Q. Now, is it your position toda y, that the property described in Plaintiff’s Exhibit B, was property that was fraudulently transferred with the intent to hinder, delay, or defraud you in the judgment that you obtained …previously …? A. Yes, I do. [sic] Q. Do you believe that transfer … would be something that constitutes what we typically call, somebody that’s an insider? That their son Justin possessed special knowledge or information being their son …? A. Yes, I do. Q. And is it your position that apparently this trust that – the trust document isn’t of record , but that this trust was an alter ego of Denise A. Tarrant or Roger Tarrant …? A. Yes, I do. [sic] Q. Do you believe that the Defendants had actual knowledge of your claim against them prior to the transfer? A. Absolutely. ... Q. Do you believe that Justin Tarrant and Denise and Roger Tarrant have engaged in a conspiracy among themselves in this attempt to damage you? A. Yes, I do. Q. Are you asking that this transaction be set aside in its entirety …? A. Yes.

3 Q. And did you have to retain me to file this action …? A. Yes. Q. Are you asking for reasonable and necessary attorney’s fees? A. I am. RR 8-11 (emphasis added). The only other trial proof was counsel’s testimony as to attorney’s fees and brief

follow-up testimony about the requested remedies.

4 Issues The Failure of Proof at Trial 1. Where the defendant has answered, the plaintiff must prove his claims at trial, even when the defendant fails to attend. Scarbrough thus needed to prove the elements of fraudulent transfer—that the transfer was made either with “actual intent to hinder” collection or “without receiving a reasonably equivalent value in exchange.” Did Scarbrough present factually-sufficient evidence to support the trial court’s implied finding on either such element? Is there even legally-sufficient evidence of this? And is there legally and factually-sufficient evidence of Scarbrough’s derivative claim for conspiracy?

The Failure of Due Process: A Lack of Proper Notice of the Trial Hearing 2. Due process requires that an answering defendant have reasonable notice of trial. Here, a hearing was set for 11 a.m. January 6. The Tarrants failed to appear. But so did Scarbrough’s counsel. The district court thus reset the case for “prove up” at a 1:30 p.m. session of court, which Scarbrough’s counsel attended by telephone. There was no notice to the Tarrants of the prove-up trial. Does due process require remand for a new trial that all parties are invited to attend? 3. The clerk’s file includes a “notice of setting” (for the initial, aborted 11 a.m. hearing) with a hearsay notation “CC: Jeffrey Coe; Jim Echols.” Neither Mr. Coe nor Mr. Echols appeared at the 11 a.m. session of court. And neither the district clerk’s file nor the trial record contains any indication that the filed notice of setting actually was sent. Is a remand required because the record does not prove notice even of the initial, aborted setting?

5 Summary of Argument Because the Tarrants timely answered Scarbrough’s collection suit with a general

denial, which remained effective at all times, Scarbrough could not win by “default” but

had to prove all elements of liability through probative evidence admitted at trial the

same as if the Tarrants had been present. Scarbrough did not do this. There was a prove-

up hearing. But the evidence did not prove a fraudulent conveyance. On critical

elements of his fraudulent-transfer theory, Scarbrough offered only surmise—either an

asserted conclusory “position” or a subjective and speculative “belief.” Such positions

and beliefs are non-probative. Consequently, there was factually-insufficient proof on

the essential elements of a fraudulent transfer, requiring that the judgment below be

reversed and the cause remanded for a new trial.

Alternatively, due process requires remand for a new trial, because the record

lacks the necessary notice to the Tarrants of the prove-up hearing. Here, there are two

bases for finding such a failure of notice. First, there was no attempt to notify the

Tarrants of the actual, rescheduled trial. And second, there is no evidence of proper

notice even of the initial, aborted setting. On motion for new trial, the Tarrants broadly

challenged notice. The lack of factually sufficient evidence establishing any such notice

relieved the Tarrants of any burden to prove the other Craddock requirements, and now

requires reversal and remand for a new trial.

6 Argument I. Because Scarbrough failed to prove his case, the post-answer default judgment should be reversed and the cause remanded for a new trial. This appeal challenges what the courts commonly call a post-answer “default.”

But that term is something of a misnomer: when a defendant answers suit, he “preserves

any issues he has properly joined by his answer.” Maldonado v. Puente, 694 S.W.2d 86, 91

(Tex. App.—San Antonio 1985, no writ). A general denial thus tasks the plaintiff with

proving each element of his claim by probative, factually-sufficient evidence—even

when the defendant is noticed for trial but does not appear. Paradigm Oil, Inc. v. Retamco

Operating, Inc., 372 S.W.3d 177, 183 (Tex. 2012).

Here, trial was to the court, RR 4, which made no formal findings of fact. On

appeal, this Court infers all factual findings necessary to support the judgment, but only

insofar as there is factually-sufficient evidence to sustain them. Roberson v. Robinson, 768

S.W.2d 280, 281 (Tex. 1989). In appeal from a bench trial, legal-sufficiency and factual-

sufficiency attacks can be raised for the first time on appeal. TEX. R. APP. P. 33.1 (d); see

Sammons v. Elder, 940 S.W.2d 276, 279 (Tex. App.—Waco 1997, writ denied); Davis v.

Berger, 2000 Tex. App. LEXIS 448, *3 (Tex. App.—Dallas 2000, no pet.).

The Tarrants seek factual- and legal-sufficiency reviews of the evidence

supporting the elements of Scarbrough’s fraudulent-transfer and conspiracy claims. In

a factual-sufficiency review, this Court considers all the evidence and may reverse if the

judgment is so against the great weight of the evidence that it is clearly wrong or

7 manifestly unjust. Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998).

In a legal sufficiency review the court considers the evidence in the light most favorable

to the finding, crediting favorable evidence if reasonable jurors could and disregarding

contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168 S.W.2d

802, 822 (Tex. 2005).

A. Scarbrough needed to present legally- and factually-sufficient evidence proving the elements of a fraudulent transfer. Scarbrough’s suit raises a claim that the Tarrants made a fraudulent transfer of

Roger Tarrant’s real property and it seeks to broaden the claim’s reach through the

allegation of a conspiracy. CR 4, 5-7. The conspiracy allegation, being derivative, will

not sustain a judgment if the claim for a fraudulent transfer fails. See Tilton v. Marshall,

925 S.W.2d 672, 680-81 (Tex. 1996) (liability for conspiracy depends on participation

in some underlying tort). To succeed on the fraudulent-transfer claim, which invokes

the Texas Uniform Fraudulent Transfer Act (TUFTA), Scarbrough needed to prove

that the conveyance was made either

(a) “with actual intent to hinder, delay, or defraud” a creditor or (b) “without receiving a reasonably equivalent value in exchange” when the debtor: (i) “was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction” or (ii) “intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to

8 pay as they became due.” TEX. BUS. & COM. CODE ANN. § 24.005(a)(1) & (2). Scarbrough at trial made no adequate showing or either an “actual intent to hinder” his

judgment’s collection or the absence of “a reasonably equivalent value in exchange.”

B. Scarbrough failed to prove the fraudulent-transfer elements, but instead testified to legal “positions” and speculative “beliefs.” Nowhere in the civil jurisprudence is the need of probative evidence greater than

with matters affecting ownership of Texas real property. Certainly, an otherwise valid

real-property conveyance should not be invalidated in the absence of probative and

factually sufficient evidence of some basis for doing so. This is where Scarbrough’s

judgment fails.

The entire trial record spans ten pages. Only six transcript pages address liability.

RR 5-10. The testimony there is probative only of the facts that:

• Scarbrough obtained a judgment against Roger and Diane Tarrant in a prior proceeding. RR 5-6; PX A.

• At about that time, Roger signed a warranty deed conveying certain items of real property to Justin Tarrant. RR 7; PX B.

• The deed recites that it was given in exchange for no less than five items of consideration: (1) “[c]ash,” (2) “a note … in the principal amount of FIFTY TWO THOUSAND THREE HUNDRED TWENTY FIVE AND NO/100 DOLLARS,” secured by a vendor’s lien and a deed of trust, (3) assumption of a first-lien note executed by Roger Tarrant in the principal amount of $40,000, (4) assumption of a second-lien note, also executed by Roger Tarrant, in the principal amount of $15,000, and (5) promises to perform Roger Tarrant’s duties under the deeds of trust associated with the first- and second-lien notes being

9 assumed and to indemnify Roger Tarrant from any loss associated with a breach or default under the first- or second-lien deeds of trust. PX B.

• The defendants had actual knowledge of Scarbrough’s claim before the conveyance. RR 9.

• The Tarrants’ responses to interrogatories in aid of collection indicated they had no substantial assets. Id. This proof is legally insufficient to sustain an implied finding either that the

Tarrants entered the conveyance with actual intent to hinder Scarbrough or that they

did not exchange reasonably equivalent value. It at most shows an approximate

correlation in time between the collection suit’s disposition and the conveyance, which

was itself a legitimate means to finance the costs incurred in defending the collection

suit—costs made necessary by Scarbrough’s suit. Because it is at least equally consistent

with the lack of actual intent to hinder as with its converse, this correlation in time is

no evidence from which to infer intent. It likewise is no evidence of the lack of an

equivalent-value exchange. Indeed, there is no evidence valuing the land Roger sold.

The only evidence probative of value is evidence of the positive value Justin gave in

exchange.

Here, it could be tempting to infer intent to hinder from the fact the land was

conveyed to an apparent insider, which is a factor the courts may consider when

evaluating a conveyance for intent to defraud. TEX. BUS. & COM. CODE ANN. § 24.005.

But the law is clear that this factor standing alone is never enough to justify judgment

that a conveyance is fraudulent. Williams v. Houston Plants & Garden World, Inc., 508 B.

10 R. 11, 18 (S. D. Tex. 2014) (“Williams has shown that a single badge of fraud is

present—that the transfers were made to insiders. ‘As a matter of law, a finding of

fraudulent intent cannot properly be inferred from the existence of just one badge of

fraud.’”). This is doubly true in our case, given that the deed recites substantial

consideration from Justin and is otherwise silent on the value of the real property. The

only probative inference in such a situation is that the consideration given is reasonable

equivalent to that received.

The evidence discussed above is of course also factually insufficient to sustain

any implied finding of an actual intent to hinder or of the lack of a reasonably equivalent

value given in exchange. These facts, which do not sustain a probative inference of

intent to hinder or lack of equivalent value even when considered in isolation, fall

absolutely flat in the face of Justin’s substantial consideration—including cash, a

$52,000 note, and assumption of two prior liens in a total principal amount of

$55,000—which strongly tends to negate any actual intent to hinder and lack of

reasonably equivalent consideration. Absent further probative evidence, the correlation

in time of the property’s sale to an apparent insider is thus legally and factually

insufficient. And there is no other probative evidence.

The remainder of the record respecting liability is non-probative and thus

amounts to nothing. It consists only in Scarbrough’s self-serving surmise and bare

conclusions. As stated earlier, he asserted that:

11 • It was his “position” that the property “was fraudulently transferred with the intent to hinder, delay, or defraud” him. RR 8-9.

• He “believe[d]” the transfer was “an attempt to prevent” him from seeking to collect on his judgment from the transferred property. Id. at 9.

• He “believe[d]” Justin Tarrant would be “an insider” and would have had some unidentified “special knowledge or information … relating to the existence of the property.” Id.

• It was his “position that apparently” the trust that loaned Justin a portion of the purchase money—the D. A. Tarrant Irrevocable Trust—“was an alter ego of Denise A. Tarrant or Roger Tarrant.” Id.

• He “believe[d]” the transfer caused him harm because the transferred property “was one of the few … tangible assets that were available to collect.” Id. at 10.

• He “believe[d]” the Tarrants had conspired in an attempt to damage him. Id.

To qualify as probative of a fact, an item of evidence must support an inference

that the questioned fact is more likely true than not. See Calvert, 38 TEX. L. REV. “No

Evidence” and “Insufficient Evidence” Points of Error, 38 TEX. L. REV. 361, 362-63 (1960).

Scarbrough’s “positions” and interspersed speculative personal “beliefs” will sustain no

such inference of fact, either of actual intent to hinder or transferring an asset without

receiving a reasonably equivalent value in exchange. TEX. BUS. & COM. CODE ANN. §

24.005(a). They are as a matter of law simply not probative as evidence.

A party’s “positions” are not evidence but are mere assertions or conclusions—

items to be proved by other facts. So it is with a person’s beliefs: they, too are not factual

but are mere conclusory assertions of what the party wishes or surmises the facts to be.

12 They have zero probative value and thus will not support a judgment—even when

admitted at trial without objection. City of San Antonio v. Pollock, 284 S.W.3d 809, 816

(Tex. 2009) (conclusory allegations have no probative value); Continental Coffee Prods. Co.

v. Cazarez, 937 S.W.2d 444, 452 (Tex. 1996) (employee’s subjective beliefs “’are no more

than conclusions’ and do not raise a fact issue”); accord Ed Rachal Found. v. D’Unger, 117

S.W.3d 348, 355 (Tex. App.—Corpus Christi 2003), rev’d in part on other grounds, 203

S.W.3d 330 (Tex. 2006); see generally Calvert, 38 TEX. L. REV. at 362-63.

Any belief that the transfer was intended to hinder the collectability of

Scarbrough’s judgment is speculative, pure and simple. It would be equally speculative

to conclude that the property was not given in exchange for consideration of

“reasonably equivalent value.”

Because there is factually insufficient evidence (and likely legally insufficient

evidence) to sustain implied findings of the fraudulent-transfer elements, the judgment

below should be reversed and the cause remanded for a new trial. Bennett v. McDaniel,

295 S.W.3d 644, 645 (Tex. 2009) (when the evidence at trial is legally insufficient to

sustain post-answer default judgment, the proper remedy is to remand for a new trial,

not to render).

II. Because the Tarrants lacked notice of the actual trial, due process requires a new trial. Due process requires that every party that has appeared in the case receive notice

of the trial. See LBL Oil Co. v. Int’l Power Servs., Inc., 777 S.W.2d 390, 390-91 (Tex. 1989).

13 That did not happen here. A trial was scheduled for 11 a.m. on January 6. But when the

case was called that morning, the trial could not proceed, because neither side was ready.

Neither Scarbrough’s counsel nor anyone representing the defendants was present. RR

4-5. So the trial court reset trial for a time when Scarbrough’s counsel could

participate—a 1:30 p.m. session of court, which Scarbrough’s counsel could attend by

telephone. RR 4. The Tarrants were not present at this trial—they were given no chance

to participate. As the trial record indicates, no one told them or their counsel of the

rescheduled trial or of the opportunity to appear by telephone. Id. Only Scarbrough and

his counsel received that privilege and accommodation. This failure of notice and one-

way accommodation of only Scarbrough’s counsel, with no notice to the Tarrants’

counsel, obviously violated the Tarrants’ due-process rights.

The clear rule is that all parties who have answered are entitled to 45 days’ notice

of an initial trial setting, and are entitled to reasonable notice of any further or

rescheduled trial setting or merits hearing thereafter, both as a matter of Texas

procedure, TEX. R. CIV. P. 245, and of due process under the U. S. Constitution’s

Fourteenth Amendment. See LBL Oil Co., 777 S.W.2d at 390-91. Notice merely of an

initial setting does not suffice—not even when the party has failed to appear at the prior

setting. See Green v. McAdams, 857 S.W.2d 816, 819 (Tex. App.—Houston [1st Dist.]

1993, no writ) (rejecting argument that notice of initial setting was “constructive notice”

of the reset trial session); accord Worthen v. Glatzer, 1999 Tex. App. LEXIS 1913, *8 (Tex.

App.—Dallas 1999, no writ). A party who has answered merits reasonable notice of the 14 actual default-judgment hearing. In re $475,001.16, 96 S.W.3d 625, 627 (Tex. App.—

Houston [1st Dist.] 2002, no pet.); Green, 857 S.W.2d at 819 (reversing post-answer

default judgment because defendants, who failed to appear at initial setting after

receiving dismissal notice, were entitled to reasonable notice of rescheduled trial date);

Worthen, 1999 Tex. App. LEXIS 1913 at *8 (where plaintiff requested a default

judgment at the noticed September 9 setting but there was no notice given of the

September 13 setting at which the default judgment was rendered, there was a fatal lack

of notice); Maldonado, 694 S.W.2d at 87 (defendant’s failure to appear at noticed jury

selection time was not a failure to appear for trial, did not dispense with requirement

that defendant be given notice of the merits trial, and did not support entry of post-

answer default judgment). The absence of such notice requires the grant of a new trial—

without necessity of any further showing: to additionally require proof of the Craddock

elements “would violate due process.” Id.; see Lopez v. Lopez, 757 S.W.2d 721, 723 (Tex.

1988) (defendant who lacks notice of a trial setting is not required to establish a

meritorious defense under Craddock in order to obtain a new trial following a post-

answer default); see also Peralta v. Heights Medical Center, Inc., 485 U.S. 80, 85-87 (1988).

The Tarrants’ failure to appear at the 1:30 trial was not due to inadvertence, to

misunderstanding, or to any reason but the lack of notice. The Tarrants broadly

challenged this lack of notice below, in their motion for new trial. CR 65 (“Defendants’

attorney, Jim Echols, did not receive notice of hearing for the January 6, 2017 final

hearing”; “Defendants’ attorney, Jim Echols’ non-appearance at this hearing was due 15 to not knowing the hearing was taking place, rather than due to an intentional act or

the result of conscious indifference.”). The failure to grant the requested new trial was

error.

What is more, fundamental fairness and professional courtesy should have

required that when the accommodation was afforded to Scarbrough’s counsel, notifying

him by phone and permitting him to appear at the “prove up” by telephone, an

equivalent accommodation should have been extended to the Tarrants. See Dolgencorp of

Tex., Inc. v. Lerma, 288 S.W.3d 922, 929 (Tex. 2009) (noting that “judges and lawyers

should, and in most instances do, extend common and professional courtesies to other

judges and lawyers”). The Texas Lawyer’s Creed, cited in Dolgencorp, certainly takes this

view, stating that “I will not take advantage, by causing any default or dismissal to be

rendered, when I know the identity of an opposing counsel, without first inquiring

about that counsel’s intention to proceed.” TEX. LAWYER’S CREED - A MANDATE FOR

PROFESSIONALISM, III (11). Adherence to the Creed would have required at least a

phone call to Mr. Echols to notify him of the prove up and offer to let him participate

in the hearing by telephone. Here, the record is silent on any such notice or

accommodation. As a result, the trial and judgment violated fundamental notions of

fairness and professional courtesy.

16 III. Because the record omits to prove adequate notice of even the initial setting, the Tarrants have been deprived of their ability to show harm. The record fails to prove proper notice of even the initially scheduled, morning

setting, at which even Scarbrough was not ready to proceed. The court’s file contains a

“notice of setting” respecting the 11 a.m. proceeding.1 But that hearsay notice does not

prove it was sent to the Tarrants’ counsel over the challenge, in the Tarrants’ motion

for new trial, CR 65, stating that no such notice was received. The document includes

a notation “CC: Jeffrey Coe, Jim Echols.” Supp. CR __ (attached). But this is not

evidence that the document was actually mailed to Mr. Echols. And here, an inference

that notice was not sent is raised by the fact that Scarbrough’s own counsel did not

appear at the appointed setting, RR 4, and the record does not indicate he knew of it in

advance.

A failure of notice “deprives a party of his constitutional right to be present at

the hearing, to voice his objections in an appropriate manner, and results in a violation

of fundamental due process. Armstrong v. Manzo, 380 U.S. 545, 550 (1965); Green, 857

S.W.2d at 819. Thus, when a party disputes that notice was properly sent, it falls to the

plaintiff to actually prove the matter.

It is true that notice properly sent pursuant to Rule 21a raises a presumption that notice was received. [citation omitted] But we cannot presume that notice was properly sent; when that is challenged, it must be

1 The Tarrants have requested that the district clerk prepare a supplemental clerk’s record consisting of this notice. A copy of the notice of setting is attached. 17 proved according to the rule. Mathis v. Lockwood, 166 S.W.3d 743, 745 (Tex. 2005) (per curiam). So Scarbrough was put to the task of proving the asserted notice was sent to counsel.

He failed to do so. The record reflects only that the trial court took judicial notice of its

file. RR 4. But that was insufficient.

“A certificate by a party or an attorney of record, or the return of the officer, or

the affidavit of any person showing service of a notice shall be prima facie evidence of

the fact of service.” TEX. R. CIV. P. 21a. In this case, the record contains no such

certificate, return receipt, affidavit, or other testimony purporting to certify any actual

sending of notice. This was fatal to the post-answer default judgment in Mathis v.

Lockwood—even though counsel in that case gave his oral assurance that he had served

the trial notice (an assurance that is lacking here). 166 S.W.3d at 745. 2 And without

proper evidence the notice was actually sent, there can be no presumption that counsel

received any such notice. Id. So it is here. The record contains no evidence, or even

unsworn assertion, from which to infer that the clerk actually mailed the notice of

hearing to Mr. Echols.

Moreover, the notice was ineffectual in yet a final respect: it did not identify that

the case was set for the merits trial. It said only that the case had “been set for FINAL.”

2 Here, as stated, the judgment contains a pro forma allegation that “due notice” was provided. CR 41; App. A. But that notice was effectively rebutted when Scarbrough’s counsel also failed to appear at the appointed setting. See, e.g., Wilson v. Indus. Leasing Corp., 689 S.W.2d 496, 497 (Tex. App.— Houston [1st Dist.] 1985, no writ) (“Where a judgment recitation [of notice] is effectively rebutted by other evidence in the record, it is no longer taken to be true.”). 18 Supp. CR. __ (attached). In Maldonado v. Puente, a notice of setting for “jury selection”

was held insufficient notice consistent with due process to allow trial to proceed after

the defendant did not show up for jury selection. 3 694 S.W.2d at 91. Here, notice of a

setting for “FINAL” is similarly inadequate to allow a prove-up trial to proceed at a

later court session in the Tarrants’ absence. The plaintiff has the burden of proving the

defendant was served in strict compliance with the rules. Cox v. Cox, 298 S.W.3d 726,

733 (Tex. App.—Austin 2009, no pet.); Naan Props., LLC v. Affordable Power, LP, 2012

Tex. App. LEXIS 271, *5 (Tex. App.—Houston [1st Dist.] 2012, no pet).

Conclusion and Prayer

Because there is factually insufficient evidence of the required elements of a

fraudulent transfer and also because there was a lack of proper notice to the Tarrants,

the judgment below should be reversed and the cause remanded for trial.

Respectfully submitted,

__/s/ Gregory D. Smith________ Gregory D. Smith Bar No. 18600600 SMITH LEGAL PLLC 110 N. College Ave., Suite 1120

3 What the notice of the 11 a.m. setting actually stated matters. In Maldonado v. Puente, the parties were notified by letter to appear for jury selection “on that date” and further notified in the same letter that their case “will be tried at a subsequent date.” 694 S.W.2d at 87. The defendants and their counsel arrived at court 40 minutes after the appointed setting. The plaintiff had been granted a post-answer default judgment in the meantime. On appeal, because the notice of setting was for jury selection, and stated that trial would occur “at a subsequent date,” the failure to appear at the appointed time for jury selection could not support a post-answer default on the merits. Id.

19 Tyler, TX 75702 Telephone: (903) 630-7165 Facsimile: (903) 609-3077 greg@smithlegaltx.com

__/s/ Jim Echols______________ Jim Echols Bar No. 06391500 SAUNDERS, SCHMIDT & ECHOLS, P.C. 202 W. Erwin Street, Suite 200 Tyler, TX 75702 Telephone: (903) 595-3791 Facsimile: (903) 595-3796 j.m.echols@att.net

Attorneys for Appellants

20 Certificate of Service

This brief has been served on all counsel of record via e-filing on this 31st day

of July 2017.

____/s/ Gregory D. Smith________ Gregory D. Smith

Certificate of Compliance

1. This brief complies with the type-volume limitation of TEX. R. APP. P. 9.4 because it contains 4628 words, excluding the parts of the brief exempted by TEX. R. APP. P. 9.4(i)(2)(B).

2. This brief complies with the typeface requirements of TEX. R. APP. P. 9.4(e) because it has been prepared in a proportionally spaced typeface using Microsoft Word in 14-point Garamond font.

Dated: July 31, 2017.

21 NO. OCCV16--017-3

DANIEL R. SCARBROUGH, IN THE DISTIUCT COURT Plaintiff

v. 3RD JUDICIAL DISTRICT ... ~ , ROGER TARRANT, ET AL. Defendants OF ANDERSON COUNTY, TEXAS . -

DEFAULT JUQGME!:!T

On January 6. 2017. ca~ on tg belbeacd Plaintiffs. DANIEL R. SCAR~UGH,. req"""t for relief. Plainti!I appeared~ and by att~- r - .~y L Coe.

Oefen

default. Defend3nt, THEO.A. TARRANT_IRR.EVOCASLE TRUST, failed to appear alter being

pnMOeC! clue notice of the hearing an~ has w~oAy made default.

On the claim for violations of the Uniform FraudlAent Transfer Aq and pvil conspiracy.

the CO

IRREVOCABLE TRUST. IT IS THEREFORE ORDERED. ADJUDGED AND DECREED Iha!

the Wananty Deed with Vendoc's Uen and Deed Of Trust attached hereto as Exhibit "A" and ·a· respectively, are hereby SET ASIDE in tlleir entirety and are NULL AND VOID.

IT IS FURTHER ORDERED, ADJUDGED and DECREED that Defendants, ROGER

TARRANT. DENISE TARRANT, JUSTIN TARRANT. and THE D.A. TARRANT IRREVOCABLE

TRUST. their officers, agents, servants. and employees are hereby enjoined from transferring,

conveying. assigning, selling. or olhe

DEFAULT JUDGMENT Page 1 of 2 P~lfS Exhibits "A" and ·e· attached hereto and incorporated herein by this reference the same as if f\lfty copied aod set fodh at length and that the District Cieri< of Anderson County. Texas issue a

Writ of Injunction upon the request of PLAINTIFF DANIEL R. SCARBROUGH enjoining

Defendants. ROGER TARRANT, DENISE TARRANT, JUSTIN TARRANT, and THE DA

TARRANT IRREVOCABLE TRUST. their officers, agents, servants, and employees from

transfemng, conveying, assigning, selling. or otherwise divesting ownership of the prope11Y

described in Exhibits "A" and ·e· attached hereto and incaporated hetm by this reference the same as if fully copied and set fOl1h at length

IT IS FURTHER ORDERED that PLAINTIFF DANIEL SCARBROUGH is hereby

authOrized to lelly exeaJtion against the property desaibed in Exhibi!s "A" and ·ir.

Plaintiff, DANIEL R. SCARBROUGH, is entitled to the sum of $3,000.00 (Three

Thousand and No/100 Dollars), as attorney's feC$. to bear interest at the legal rate per amum

from the date this judgment is signed unti paid.

Costs of court are hereby !axed against Defendants.

IT IS ORDERED that Plaintiff. DANIEL R. SCARBROUGH, is entitled to enfon:e thts

j udgment through abstract, execution and any other process neoessary.

AtJ relief not granted herein is eJ

SIGNED on January 21 . 2017

HONORABL JUDGE PRESIDING

DEFAULT JUDGMENT Page 2 of 2 P3Ji!S 2014-00015702 11/24/2014 , :08:18 AM Page 2 of 9 • •

NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE AHY Of TI1E FOLLOWING INFORMATION FROM THIS INSTRUMENT BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER.

Warranty Deed with Vendor's Lien

Date: November 21, 2014

Grantor: ROGER TARRANT

Grantor's. Malling Address:

P. 0 . Box 361 Frankoton. TX 7S763

Granbte: JUSTIN TARRANT

Grilntee's. Mailing Add'"":

P. 0 . Box 361 franln, TX 75763

Consideration:

Cash and a note of ""°" date executed by Grantw and payable to the omet or The 0 . A. Tarrant Irrevocable Trust in tile pri~I amount of FIFTY TWO THOUSAND THREE HUNDRED 1WENTY FIVE AND N0/100 DOLLARS ($52,325.00). The note is eecure<:t by a vendOt"s Hen end •uperior tit1e retained in lht. dMd in fevor of The 0. A. Tarrant Irrevocable Tru•t and by a deed of rtust or even date lrom Grantee to Terry M. fhorn. trustee: and Grantee's assumption and agreement to pay, according to their terms a first-lien note and a second llen noll!, the flf!rt lien note is executed by Grantor. and payable to 1118 Older of Sandra J. Elis, Denise A. Tarrant, Judy K. Hyde, Janet S. v.llson. tndependenl ex- of !he Estate of CaMn Ellgene ~. Deceased in the principal amount of $40.000.00. The firsHien nore is secuted by deed of !rust daled 11/27/2012 and~ in t11e realprope1tyrecord$olHendenonCounty, Texas. As further consideration Granl88 pn>mioes to keep and perform au t11e OOYenanlS and obligations al the ll"'nlor named in that deed al trust and to indemnify, defend. and hold Grantor harmless from any loss, ottorney's fees. expenses, or claims attributable to breach or dera\lll of any provlslon or this assumplion by Grantee. The second-lien note

43 ' 2014-00015702 11/24/201!. J:08:18 AM Page 3 0(9 •

is payable lo the Or's lien ag1inst. and superior title lo. Ille Prcpe

Property (lncludi1111 any imptOVtm9

Al of Grantot's undivided interest in and IO 111 lllal cerlaD lot nci, or parcel of I - located in Henderson Counry, T 0"4s. and being mote particularly df!SOribed on Exhibit ·A" attached hereto, incorpordted here:in, and made a part hereof for oll purposes

Reservation• from Conveyance:

None.

Exceptions to Conveyan~ 1nd Warnnty:

Liens dewibed as part of lhe Consideration and any other liens described in tl>is deed as being either assumed or subject to which tide is laken: validly "'"'1ing easemenb, rights-<11-way, and prescriplive rights. whether of reeog Instruments. othet !ho<> corweyanc:u of the sur1a<:e fee estate, Iha! .tied 1he Pr-rv; and taxes tor 2014, which Grantee essumes and agrees to pay, bUt not ...osequent auossments tor lhat and prior ve- ciue to change in land usage. ownership, or boCh. the payment ct which Grantor assumes. Grantor. for the Consk!eratlon and subject to rhe Reservations ftom Conveyanoe and the Exceptions to Conveyance and Warranry, grants. sells, and convoys to Grantee the Property, together will> aa end singulat the rights and appurtenances thereto in any way belonging. to haw and to hold~ to Grameo and Granlee's hod, aua:essora, and assigns lore...r. Gianto< binds Grantor and Grantor's ~ and ~ to wanant and foreVet defend all and singular the Pn:>perty to G~ - Grantee's ters. successors. and assigns against tNery person whomsoever lawfulty daiming or to claim the samo 0< any part thereof, ~l

Tho vendOl's lien again•l ancl superio< title to the Property are - until each note d - is fuly paid aoc:oo:ling to its terms. It which tim@ tl1is deed will become •.. .. I 2014-00015702 11/24/2014 , :08:18AM Page4 of9 •

absolute.

The 0 . A. Tarrant Irrevocable Trust at Grantee's reques~ has pold in cash to Granto< that pOle Trust and ""' transferred to The 0 . A. Tarrant lnevoeable Trust willlou( recou.... against Granto<.

When lite context roqui1es. singula1 nouns and p1onouns indude the plural.

~R2~ STATE OF TEXAS )

COUNTY OF ANDERSON )

This instrum"nt was aclcnowtedged befote me on '//~./ .Ji.~ 2014 by RoGER TARRANT

AnER 1tf00ftOINO Rln'\.IRN TQ; T...,,.

-- LM- Otilc. ol Ill. Tbom totL~$1Ni1t .,........._TX7901

"°".,,..,...

45 2014-00015702 1112412014 , :08: 18 AM Page 5of9

. County Oeed ~; WITNESS:. 18' Fotl:ed Elm SOWi SO cfesM• Eal 8.0 reel;

THENCE Norlli 0 ~ 3S - 3 7 seCOo SoullnWSI comet of !ht Eva M.m. ~ ~07 ..... Wt\ •Uf'j8yed .,... - and being South 0 oc1 o..i. SouO> -'5 <1ogrees Wost ~.2 faet. It Post OokSc..al 85 degroos w..t 39.0 feet;

THENCE SOUltt0~41 rrirutes30< -&uoinglhe EM\ ~OOloc>I ollhe 55.<1!19 aa. lood"'"""'"" lo ll..J. Tanani b)l IWold James Snllh ancl ...tfe l\laJla 1f"'Wsailibby4"c1~=.2$.L1~9ridreooidedlnVOllJma 1284,f'eg0633ollhe ~ Ccar\11' Dejlcj · . ""'lol lt8cl. orperool of land belog fT'°'8 ~ dH<:rlbOdl>ymotes--.. - : ~a at• 1.12'konrod b.rd atlle Nonr 111tcomerdC. 55A99 acre trm - Iha NoaO •Ill eoa,., Of "8 C. l. 0-.. 51.ney. In !he Wnl h o1 u.i £\ta - --.ze.w--~ ..- lHENCESOtmfo~ 35"*"-37- Ea&t. a1 so.oo root paso lho So""-lOomor"' Ilia 2&.07oao1ncllOll In all 3990.13footloa112' Iron rod fouod al ""' S.UU-11Corne

EXBrBrT a.A• CONTil\"llEO 2014-00015702 11/24/2014 , , :08:18AM Page6 of9 ..

"-·~TllENCE SOOTH 89dogtoes44 -Weal 15.00r..etllla 1/2' in>nroclsel ln -.,-4244; ~NORTH 0 ~ 3S "*'""'as7...,00.,s W•sl 3990.73 fe

THl;NCE NO!ml 89dl!jlUl 44 mlnui.. Easl 15.CO feot lo lhe pl3ce bOQ!Mlng .,,. eoolaltilng ':n - .. cl land. • m-;CTWr:O M - - l o l .tractorparodolllnd.511Ua!ed In lheC. L ()wans Sur;w Ablllacl 1182.lheEsllillan~ s....,.~ 129andthoFojlXPor1csSUl\loyAt.n.C1647. )ielll!W$orl ~· T"@*aill~r • pOo'lon Ola ceilaln -85.llatnttract 4 t 1 - os fjlifTraCI • a~on ata · in12.1acn>Yacl · 2aae~ asThitdTmtln.-

'THENCE: see~ 43'!15'W !1.so1ee1 .,.,._clltla tlOd; 1or..,,, most Sooll'8m , -

NlO ~ )$'Jl"W 3l45.J6 *" boil1D $T.5 leol - - .,... -Weolh ol lho Thonm ~ 15urwY ID 10 112' l R. ICI lotlll> -•-o1011>aaa1tae1 THENCE: S89 ~ 43'!1b'W. 1442.63 root with the c:ent..-llno ol a _.;it \llllllic IOad ond ~ 1n fllO Nolthoall 111\e or • 2.164 acre lt1ICI - In v..... S81 Poge 119() of a.. Dood - . of -~-Wlneq:A 112' t. R. bearsNa9c!A>gRes .a'5S'E18.38 feet

tlOllUIT "A" CONTINVl:D

47 2014-00015702 11/24/2014 ; :08:18 AM Page 7 of 9 ..

THBICE: N88 "E !133.18 feel'""'"'- Nortll h ol - 2 "10 rnict loo 1IT ~ II. set •• Ille Easl fne or 111e· f. C.tenovo 5mo)I .;nd lhe Weot ine al Ulo C. l. Owuns SUtvey H3rold J . SmlU>,SS.499 AC•• H"'1detso!!Co, OWeMA-1182. C8ZenOVaA-129, Parks A.- 647

a2aaolalclor_.ollW'd,a~olllleC. L OMrtoSUNey ,...129. T-.elsoapatQflhal14~KThfnl'no01..-dodfnV~_!~~ ... Hendencn= ol lbe Deed di~ of Hendinon COdllY. T - and belrQ rrcwe -• .....criied .., ---1bwitfnE>dil>ll"A"- ~andcna&oapmlhoteof.

l?'IACT THREE ~lholww~·~".!,dor-dland,•lllPtadlllHondmonCounlY.Si.&eolTexa1.1<1 ::.,~ • ~""""" ~ Absfnc:I No. 3-47: rowevei, In .omo fnslnilT160la tiled 1or ·~~Ille C<>t.n,Clarlt .. - ~. Taassald !rad b in41C!ed mu>. c. L ~-&owy, Ali$hct No. 1152. llw em>r. Said trac1 or porool ol land b moto pa._., y met.. """......,• •• follool!s; - . BEGrtaoaNG ala 1121n.l!uodel8"'-comctoflhe C. l. Owen• SOMY. A.bsllael No. 1 ISZ - • 2>I fl). Post Oak Bts. - 73 Deg. 63 Mh East 38.30 r..~ orod In. 16 In. Elm h- 75 dog. 29 ..... Ea1' 3U fut 1l!ENCE NOR"lll 00 0111- 35 Mio. 3 7Sec. Wal, and ol~ a feooe. a 41sta:ice ol &3l.23tectlb • 112n Iran llodott. l b -"""*"'111111tac1; Aid IJ(llnl belnil rn lhe

-In.- Soulh 8olJndory UleolllleX.rlaMllotTroct or parcol of land;

1liEHCE Horii 119 !l!oll. 43 Mil. $5 Soc. ~. aiOl'O • · fooce .and Ille Sovth Boundacy Una ol Ille ..id XelP l.1lllo( lrllle-c.ir-olllltnct.onda-O

I l 48 201•-00015703 11/24/2014' .;08:18 AM Page 2 Of 16

NOTICE OF CONFIOENTIAllTY RIGHTS: IF YOU ARE A NATIJRA1. PERSON, YOU MAY REMOVE OR STRIKE AHY OR ALL OF THE FOLLOWING INFORMATION FROM AHY INSTRUllENT IBAT TRAHSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBUC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVER'S LICENSE NUMBER.

DeedolT

Data: No.ember 21, 201•

Grant0<: JUSTIN TARRANT

Grantor's Malling Add,,.u:

P, 0. Box361 Frankston. AndenOn Coon!y, TexM 75763

TruslM: TenyM. Thorn

Trv•tee'a Malling Address:

608 E. Crawf0

Lender: THE 0. A. TARRANT IRREVOCABLE TRUST

Len

Poot Office Box 361 Frankston, TX 75763

ObUgallon

Nollt:

Date: Novomber21. 2014

Origin~ principal amount: S52,325.00

Bolrowe<: Justin Tarran!

- 1-

\, B'' 49 2014-00015703 11124/2014 ;:08:18 AM Page 3 of 16

Lender: The 0 . A. Tarrant Irrevocable TNst MalVrity date: November 21, 2044

Tenns ol Paymc

Other 0.bt Nooe.

Propffty (incJudlng any improvements);

All of Grantor's undivided interest in and to al that certain &o1. net. °' paroel of land in Henderson Coun!y, Texas, and being more particularly desc

Prior U.n: A first-lien note and a second lien note, the first lien note It e xeooted by Roger Tamont, and payable to the order of Sandra J. Ellis. Denise A Tarrant, Judy K. Hyde, Janet S. Wilson, Independent EJ

Other E.xc.ptions to Conveyance and Warranty:

Liens described as part of the Consideration and any other liens described in the deeo to Gl'antor as being either assumed ot &ubjecr to which title is take1l: vaJidty existing easement$, righlso()f.way, and prescriptiW rights. whether of reoo

For..- received and to Sn!y On payment of the Obligation and all other amounts secured by this deed of trust. this deed of trust will have no further effect and Lender will release it at Granto(s e.>

-2-

50 2014--00015703 11124/2014 , :08:18 AM ---- - Page 4 of 16 •

8. Granto<'• ()bjjg•tiona

8.1. G

B.2 Gtantor agrees to-

•· keep the Property in good repair and condition;

b. pay all taxes and - on Ille Prope

o. defend title to the Property .Wje<:t lo 1he Other Exoeptions lo Conveyance and Warranty and preserve 1he lien's priority as ij is eslllblished in lllis deed ol trust;

d. obey all laws, ordinances, and restrictive covenants appicable to the Property;

e. keep any building• oec;upied as required by the Requ~od Insurance Coverage1.i,

I. if the lien ol tllis dee;I ol trusl is not a first lien. pay or cause to be paid aa prior li

g. nolity Lender ol any Change al oddress.

C. Lender's Riglltl

C.1. lencler or l.e<1des'$ rnor1gave seMoe< may appoio d in wriMg one or mote subsliMe trustees. succeeding to an right& and reSponslblities ol Trustee.

- J-

51 .. 2014-00015703 11124/2014 , :08:18AM Page5ol16

C. 2. Hthe proceeds of Ille Obligation are used to pay any debt secured by prio< fK>ns, lender is sub

C.3. Leodet may apply any proceeds received under the property nsur.>nc:e policies covering the PIOpel1y ei11>er to reduce 1ha Ob!t!alion or to repair or replace da~ or destroyed im_,,ts covered by ll1o poUcy. If the Property i• Gn>ntofs primary resf

c.•. Notwilllslallclirlll the lelmS of 111e Noe"' 111e coouary, anc1 un1ess applicable law prohibits, al P9)'!nents received by Lenderlrom Granto< with respect to Ille Obligation or this deed of trust may, at Lendet's discretion, be applied first to amounts payable under lhis deed of trust and then to amounts due and payable to Lender with respect to the Obligation, to be appliO

C.5. If Gnmtor fails to petform eny of GranlOl's obligations, Lender may perform lliose oblOga1ions and be reCnbursed by Granto< on demand for any amounts sc paid, including attorney's lees, plus inlerest on those amounis from the dotes of payment at the rate $tiled in the Nole f0< ma1ured, "'1>8i

C.5. COUATERAL PROTECTION INSURANCE NOTICE

In •ccordancewlth the~ of S.Cllon 307-~•) of the Tex.as Flnanc>e Code, the Benefklary hereby notifies Ille Grantor as follows:

(A) the Gr.antor i. required to:

(i) kffp the collateral lnaured •g.ainst damage I n the amount the len.der apeciftea;

(iJ) purchase the insurance from an insurer that Is authortzed to do bus.lness In the ~:ta1e of Texas or an eligible surplus Hnn in.urw; and

(iii) name the Lender a• the P6raon to be paid under the pollcy in the event of a loaa;

(B) th• Grantor must, if requl...S by the Lender, deliver to the Lander• copy of the policy and proof of lhe payment of premiuma; and

52 ... 2014-00015703 - - · - · 11/24/2014 ; :08:18 AM Page 6 ot 16

(C) if the Grantor 11111s to ,,_t any requirement lisbld In Penigraph (A) ot (B), the Lender may obtain collateral pro-n Insurance on behalf of Ille Grantor at the Granto(• expense.

c. 7. It e delaull 8'Cists In payment of the Obligation or ~ of Grantor obligations and the delaoll oontinoes aftet" ltr'/ requRd notice of the delaul and the time allowed to cure, Lender may·

a. declare the unpaid principal balance and eamed interesr on the ObligaOOn Immediately due;

b. exen:iso Lender's rights with respec1 to rent under the Texas Property Code as lflen in effect;

c. direct Trustee to foreclose this lien. in which case lender or Lendel's agent will cause notice of the foredosure sale to be given as prtMded by the Texas Property Code as then in ellect; and

d. purchase the Property at any foreclosure eale by offering the h;ghesl bid and then have the bid credited on the Obligation.

C.8. I.ender may rernedY any default wilhooJt waiving h and may waive any defaUlt without wat.Ong any prior or subsequent OOfaul .

0. Trus...,·s Rights and Duties

It dOected by lender to foteclose this lien, Trustee w;a.

D. f . either personally or by agent give notice ol lhe foreclosure sate as required by Ille Te>eas Property Code as IN>n In effect;

D.2 sell and convey all or part of Ille Property "AS IS" to the highest bidder for cash with a general watranly binding G"'""". subj@ct to the Prior Lien and to the Othef Exceptions to Conveyance and Warranly and wi1hout rep

D.3. lrom the prooaods o f Ille salo. pay, in this order-

1. expenses of focedosufe . indudi'lg a re~ c::onvnisaion k> Trusle

b. to Lende<, the full amount of principal. Interest, attorney's fees. and other charges due and unpaid;

-S-

53 ..• 2014-00015703 11124/201• J:08:18 AM Pago 7 of 16

c. any amounts required by law to be paid boil<>fe payment to Granto<: and

d to Gtanror, any balance; and

0 .4. be ;nc1emnlflod, held harmless. and defended by l ender against all costs. °' expenses. and eabiities incl.rrred by Trustee for acting in 1he e>aecution enforcement of lhe llUst Ctea1ed by !his deed of IJuSI. wtrid1 inCludes al court and other costs, including attorney's fees, inCUTed by Tl\l5lee in defense of any action or proceeding taken agalns1 Trustee in that capacity.

E. G

E. 1. If any of the Property i$ sold under !his deed of lruS~ Grantor mus1 immedi$-'91y surrender possession to the purches.er. If Gtantor fails to do so. Grantor will becOfne a tenant at sufferance of lhe purcllaser, S<.t>ject to an action for fon:i>le detainer.

E.2. Recitals in any trusteo'• deed conveying lhe Propetty will be pre&umed to be tl'l.le.

E.3. Proceeding under this deed of trust llling suit for foreclosure. Of pursuing any OUie< remedy wil noi constilule an election of ""1'ledies.

E. 4. This lien will remain superior to lien& leter created even if the time of payment of au or pa

E.5. If any portion d Ille Obligation cannot be lawfuly secured by this deed of trusL payments wiR be applied first to discharge lha1 portion,

E.6. Gr.mtor assigns to lender au amounts payable to or received by G

E. 7. Grante< collateraUy assigns to Lender aR P

54 2014--00015703 11124/2014 ,:08:18 AM Page 8 of 16

assignment. Gtantor w!R apply all rent to payment of the ()Wgalion ond polfonnance of this deed al trusl. but if 1he tent exceeds the ""'°""'due with respea to the ~ and the deed of trust, Grantor may retain the excess. If a defautt exi$1$ in payment of the Obligation or performance al this deed of trust. Lender may exercise Lecidet's rights with respect to rent under tile Texas Property Code as !Mn in elleet. Lender neithe< has nor 8SSl.IT1C!S any obtigatlons as lesa« "' lancllo

E.8. Interest on the debt secured by this deed of trust will not exoeed the maximum amount of nonusurious inlerest that may be ccntracted for, laken. reser.al o1 the debt or, if the principal al the debt has been paid. relmded. Tm ptoYislon ove

E. 9. In no e"Cllt may this deed of trust secure payment of any debt that may 11()( laWfully be secured by a lien on realestate°' eited by law.

E.10. When the context requinn. singular nouns and p

E.11. The renn Note incluOes am extonsioos. modificatjons. and re,_als of the Note and all smounts secured by this dood of trust.

E. 12. Grantor agrees to matr.e an lnilial depOSil In a ieasonable amount to be detetmined by Lender and uien make moottlly payments to a fund for taxes and in&urance premiums on the Property. Monthly payments will be made on the payment dates specified in the Note. and each payment \MU be one-twelfth of the amount that lender esdmates wil be required annually for paymont of taxes ..., insurance p

55 2014-00015703 1 1/24120 1 ~ J:08:18 AM Page 9of16

makes tile final paY"*lf on the NOie. lendet wil aedil ID 1hat payment !he whole amount then in the 11.Wld or. al landcnoption, refund ft after Ille Nole is paid. If this deed of trust is fo

E.13. ff the Property is transferred by loieelosure. lhe transferee wil acquire tille to all inoorarx:e poNcies on lhe Property. Including all paid but unearned premiums.

E.14, GRANTOR MAY FURNISH ANY INSURANCE REQUIRED BY THIS OEEO OF TRUST ErTHER THROUGH EXJSTING POLICIES OWNED OR CONTROLLED BY GRANTOR OR THROUGH EQUIVALENT COVERAGE FROM ANY INSURANCE COMPANY AlJTliORIZEO TO TRANSACT BUSINESS IN TEXAS.

E.15. If Grantor transfers any part ol the Property wilhout LEK>de(s prior written consent lender may declare the Ob!Ogalion immediately payable and invoke arry remedies pnMded in lllis deed at trust lot default. If tile Properly is racidential real piopeny conlairmg !ewe< than five dweling unils °'a rHidential rnanul:lcl\lred home, this pn>visioo does not apply to (a) a subordinate lien or encumbrance that does not transfer rights of occupancy of the "'-1Y: (b) cn:iotion ol a purel'lG&e-ieh the spouse of G

E. 16. This deed of trust binds. benefils, and may be enlorOed by the successo" in inlefest ol all p;uties.

£ 17. If Gnontor and Borrower are not tho same person, the tenn Gl8ntor includes Borrowet.

E.18. Granter and each soroty, eodorsef. and guarantor ol the Obligation waive,

(c) notice of•- to the extent permiU8d by law. all (a) domand lo< paymenl. (b) presentation fa< payment to accelerate milllJrity. (d) notice of aoceletation of rnahriy. (e) protest. (f) llOtice ol p

-8-

56 2014-00015703 11124/2014 , :08:18AM Page 10of 16

E.19, Grantor will have fun reoourao liability for repayment of the pnncipal and interest of"'" Note and the perfonnanee of all covenants and agreements of Granlor in tllis Deed of Trust.

E 20. Grllntor agrees to pay reasonable attorney's fees, trustee's f-. and oourt and <>!her costs of enforcing lenders rights under this deed of trust if this deed of b\1$1 Is placed in the hands of an attorney for enforcement

E21. If any P

EZ2. The term lender include• any mo"9age setVicer for lender.

E.23. Gnmtor repre8"nts that this deed of trust and the Note are given for the f<)llowing purposes:

The debt evidenced by the Note represents cash advanced to BorTowe< at B01Towers request and which Borrower aclcnowtedges receiving.

THE W!t1IIEN "LOAN AGl!EEllEKIS" !AS HERE!NAFTEB OEFJ!tEDI l!eP!!ESENT THE FINAL AGREEJIENI B&JWEEI! JHE PARTIES NIP MAY NOT BE CQHJRADICTED BY EVIDENCE Of PRIOR CO!!IEMPQRANEQUS OR SUBSEQUENT ORAL AGRE£MENTS OF D!E PARTIES.

THERE ARE NQ UlfWRITTEN ORAl AGREEMENTS J!E!WEEN THE PARTIES.

The tem1 "loan Agreements" as used above inclucses the following documents of even date herewith; Promissory Nota and Deed ofT rui;t. together with itll othmwritten promises, agreements. und..-ings. ooovnitments or ott>er d ocuments. or any combination ol tllo>e actions or doeurnents that bom>wet may NIYe signod « receMod with rGSpe<;t to the loan fttJm the financial 0 . - . evidence by the Noto; but the tenn "Loan AgrMments" e.pressly excludes -r pr Charge card; (b) an <>pen-end &eoount (as defined in Article 5069-1.0 1. Vemon's Texas Civil Sbotues) intended 0< used primariy for per.;onal. family oc household U$$.

57 '. 2014-00015703 11124/2014 ,:08: 18 AM Page 11 of 16

STATE OF TEXAS )

This instnlment was adcnowle

My c;ommissk>n expires: - - -- - -

An!ll~~ n)"

&,.,.. OllD of Terry Ill. TIIClnl SOIC~ Sl•MI .._.....,..,.,TX ~ I

· lO-

58 2014-00015703 11124/2014 .:08:18 AM Page 12 of 16

. Oot#11y Deed Rec:onlo: WllllESS: 111' Fctted 6m SWUI 50 ~cees Eat 6.0 feel:

THEltCE NOl come< of tho Eva MMio RictJaldson 28.87 aae ltacl •llWl'Od !NS dale and belnll Sout> 0 deg'"' 35 -.Sailif87 tlOOOl1Cls fatSO.oorwfiomfltNOlfhNslOOla llodlwsl Comer; , S(fl'Os\ oak South 45 ~ Wosl,2~8" Po

TiiENCE Soulh O dog! 1942.SS fool to tl>o place of ~ and containing 80:92 acres of land.

lnclldlng a 1s-..icro road •asomant-dtsaibOd ••-= Ml>alcertaillot,ltlc(.«OOIC8iol-• -~. ~hC. L °"""" r1dlll-Coully.Tem.onlho Fei>c SU!'fty, .t.118211nd be1no Iha East 1!i.OOIOo\ of 0..55.49$...,..hd~ bD..l T""""'byHorold .-Smllh~wlre Mllla K9y Smllb by-._~2S, 1GeQ end tt<0rdod InVolllma 12&4, Pogo 8118olllie ~ Co<.;i, Deocl ReiUt!J_ lrd lol lnlel or ptwel ofland being men pai1lctiartf clesatb9dbymolo10ftdboundsasfolcMs:

"'° ~-• 112'Rnlodbr.:latbe--oflho5$Jl~t1Ct·lla:t b Nc""ho 1t cio

THENCESOUIN Odeg-35-3TsecondeEa$1.al50.00IOOlpasslle - c o n . o fa. 28.97 ""°"'*andtnall 39ll0.73roo1toa1n' t10111odfoUad et lho ScxAheaslCcimorolthe 15!5.490 ""9 ltacl. h "'6 Eosl margin olCounly Road 4224;

59 2014.()()()15703 11/24/2014 .08:18 AM Page 13 o f 16 •

THENce: SOUTH 811«-• 44 Mkluleo W.,;t 15.00 feel to 1 1fl! Iron n>ad 424'4;

nENce HOfUH o - 35 - 37 ...,.;,.,. w..13llll0.73 ,.., •• • 112" - ""'.etIn 111SHoct\ llno oil!» SS.4911 ocn tract; l\lENCE NORni 89 degrses 44 mltYJl.. ea.i 15.00 - to !ho ploce bOQ1nninCI. · lAACT Tv,:O AllthatClftalnlol, ln>Clor poroelof- S1"1otod In fheC. LOW.no Surv.y Absltad 1182,the~~~-129and.,_FolxPatb$U!W)'Abs...Cl647, Hencl....,.;~, T·Ml~aporblda'*-d•carfaf>12.18Cl9!nld-.. Seg ...... par1lc;ulai1yd....ibedbyn>eles ...,., bounds .. rot"""" .

'THENCE:

6811~43~37.i;Qfeel f<>r!he moot Souttiem- -oltia- . l«lO dlogl.u Y/3TW 2645.75 foel beW19 :r7.S fee! ........ ID Vlt _,,..... hol U.. Tho

!.XHJ.BIT "'A" CQjl(TLW'ED

60 2014-00015703 11/24/2014·. .08:18 AM Page 14 of 16 ..

H.wo1clJ, Smllh,SS.4!191\C, He-CO.. Owens A·1182. CazenovaA·129, PalbA· w THENC€; N00 deQreos S5'37'W 553,g/ feel 'Mlh Iha W..C line ol lho ~ Qnoay1o lho plaat cl ~dng ond """'"1nl<'O 55.499 ..,... cl lond. SAVE 1'N1> EXC!!i1't

51 • 2014-00015703 11/24/2014> ..08:18 AM Page 15 of 16 •

- - THENCE SOIJ'O!Oo°'9.3SMn i17 SeC. Eu~ a!ctlg o r.nce. •disbnooolB3f.SO f$et IO a 112 In. 1toi1RZJdot1h0 Northe¥t ~ ol ... C. L 0wooo SUrvey;

62 .- 2014-00015703 11/24/2014· .08: 18 AM P""e -~ 16 ol 16

£XHJ..81T "'A" CO~IJN UtO

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ANOERSOH COUNTY OISTRICT COUttT SCIO 14, Church Stfffi. ?-.)k.-rurie. 1X /$801 JUDGE Mark C3Ihoon

NOIJCE Of SETTING

Fill: CO?Y

IN RE: CAUSf NO: OCCV16-017·J OATE: NOVf'tnbe'f 07. 201~

OJ\NfCL SCAR3ROUCH

ROGER TAR.RANT.DENIS!: I ARRA.NT.JUSTIN lARRANT,O.A. TAAAl\NT IR.REVOCABU. TRUST

TAt:f NOTICE that the AboV(< style and numbe1<.-d cause has b~ set for FINAL on rhe Glh day of .tanua1y, 2017 at l l:OOAM, IN THE ANDERS<>t.J COUNTY COURTI IOUSE. PAl.E$11NE, Tr)(AS,

Janlet Slaples 01$tti('l Clerk. Anders.on County CC; Jeffr.!')'Coe; Jim Echols