Rose Mary G. Sanchez and Noe G. Sanchez v. Christopher Paul Montalvo A/K/A Chris Montalvo and MadChris, LLC

• Court: Court of Appeals of Texas
• Decided: January 7, 2021
• Docket: 13-19-00121-CV
• Status: Published

Opinion

NUMBER 13-19-00121-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

ROSE MARY G. SANCHEZ AND NOE G. SANCHEZ, Appellants,

v.

CHRISTOPHER PAUL MONTALVO A/K/A CHRIS MONTALVO AND MADCHRIS, LLC, Appellees.

On appeal from the 94th District Court of Nueces County, Texas.

MEMORANDUM OPINION Before Justices Benavides, Longoria, and Tijerina Memorandum Opinion by Justice Tijerina

Appellants Rose Mary G. Sanchez and Noe G. Sanchez appeal the trial court’s

order granting partial summary judgment in favor of appellees Christopher Paul Montalvo

a/k/a Chris Montalvo and MadChris, LLC. By five issues, appellants assert the trial court erred by: (1) finding that appellants did not have an executory contract pursuant to the

property code; (2) finding that the seller, Dexter Wright, provided appellants with proper

notice; (3) finding that appellees were bona fide purchasers; (4) finding that appellants’

claims were barred by the statute of limitations or laches; and (5) dismissing appellants’

interference with a contract and civil conspiracy claims. We reverse and remand.

I. BACKGROUND

A. The Contract

In 2004, appellants rented a residential property in Corpus Christi (the property)

from Wright. In 2012, Wright offered to sell the property to appellants, and on June 9,

2012, they entered a contract for deed to purchase the property from Wright. Wright

provided the contract, which consisted of three pages and a combination of three different

forms (“Promissory Note,” “Option to Purchase,” and “Governing Law”). The terms of the

contract required appellants to pay a $5,000 down payment and monthly installments of

$702 “with taxes” for approximately ten years before obtaining the deed. The monthly

installments included payment for the property taxes, which escalated beginning in 2015

to account for the increase in property taxes.1 Neither party recorded the contract in the

Nueces County property records.

Appellants paid the $5,000 down payment and continued to live on the property

for six more years. According to appellants, Rose moved out of the home, but Noe

1 According to the terms of the contract, appellants made the following increased monthly payments to compensate for increased taxes: $725 in 2015, $750 in 2016, and $778.50 in 2017.

2 continued to live there until Hurricane Harvey damaged the home. Noe temporarily moved

out of the property in 2017 while he actively repaired the home. Appellants continued to

make their monthly payments, paid monthly electricity bills, received mail at the property,

and left their personal belongings on the property.

Noe claims that on September 28, 2018, when he attempted to pay for September

and October’s monthly installments, Wright demanded that appellants vacate the property

because Wright had sold it to someone else. On October 9, 2018, appellants assert

Wright changed the locks and had law enforcement remove appellants from the property.

That same day, Southern Builders Co., LLC (“Southern Builders”) entered into a

contract with Wright to purchase the property.2 Thereafter, Southern Builders assigned

its rights to the property to appellees by warranty deed, which appellees filed in the

Nueces County real property records. According to appellees, they purchased the

property from Wright seeking to make it habitable again because it appeared abandoned.3

Appellees hired a title insurance company and obtained a title commitment to the

property.

Before appellees closed on the property, appellants presented themselves to

MadChris with a promissory note under which they claimed an interest to the property

alleging they had entered an executory contract with Wright in 2012. See TEX. PROP.

CODE ANN. § 5.062(a). On October 15, 2018, appellants sued Wright for wrongful

2 Appellants claim that Montalvo owns and controls Southern Builders, and Montalvo does not dispute this. From the record, it appears Montalvo signed the contract.

3 Appellees purchased the property for $38,000 while appellants were to pay over $87,000 over the course of their contract.

3 foreclosure, breach of contract, common law and statutory fraud, unjust enrichment, relief

and offset, and civil conspiracy. Appellants also sued appellees for civil conspiracy and

sought a declaratory judgment to determine their right to the property. According to

appellants, they had an equitable right and interest to enforce their contract with Wright,

were entitled to possession of the property and sought to convert their executory contract

into a warranty deed with a vendor’s lien.

On November 8, 2018, appellees responded asserting they purchased the

property for value from Wright, such that they were bona fide purchasers, seeking

declaratory relief that the property was not encumbered by an equitable claim by the

appellants, and seeking to quiet title, among other causes of action.

On October 16, 2018, appellants filed an application for temporary restraining

order and temporary injunction requesting that the trial court prevent Wright and appellees

from selling the property and to immediately return possession of the property to

appellants. Wright and appellees generally denied appellants’ claims, and the parties

entered an agreed temporary injunction order, pending final disposition of the case.

B. Summary Judgment Motion

Appellees filed a motion for partial summary judgment asserting that they acquired

legal title to the property by warranty deed and were bona fide purchasers. They further

asserted that appellants did not have an executory contract as a matter of law because

appellants only produced a document titled “Promissory Note,” and appellants’ claims

were barred due to the statute of limitations or laches. Appellees attached: (1) appellees’

affidavit wherein Montalvo claimed he was a bona fide purchaser and acquired rights to

4 the property from Southern Builders; (2) Wright’s affidavit wherein he stated that

appellants were in “serious” default and past due in the amount of $6,132.32 as appellants

had failed to pay ad valorem taxes on the property; (3) the title insurance; (4) the

settlement statement between appellees and Wright; (5) the warranty deed conveyed to

MadChris, LLC on October 19, 2018; and (6) appellees’ attorney’s affidavit wherein he

stated it was his opinion that appellants did not have an executory contract as a matter of

law.

In response to appellees’ motion for summary judgment, appellants asserted their

contract with Wright effectuated a sale of the property, appellees had notice of appellants’

claims such that they were not bone fide purchasers, and Wright failed to give appellants

the required statutory notice. As evidence, they attached: (1) the contract; (2) Noe’s

affidavit wherein he stated he made the July and August monthly payments without

hindrance, and Wright accepted payments for these months; (3) Rose’s affidavit wherein

she averred she paid increased monthly installments to account for the increase in

property taxes as documented by Wright in the contract; (4) monthly receipts from Wright

dating July 2012 through July 2018; (5) numerous receipts evidencing the repair work

that was being done on the home; and (6) pictures evidencing the multitude of damages

from Hurricane Harvey.

The trial court granted appellees’ motion for partial summary judgment, finding that

appellees owned the property in fee simple absolute and that neither Wright nor

appellants had any equitable or legal entitlement to the property or any part of it. 4

4 The trial court severed appellants’ claims against appellees making the motion for partial

5 Appellants appealed.

II. STANDARD OF REVIEW

We review the trial court’s decision on a motion for summary judgment de novo.

Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). The movant has the

burden of showing 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; Nixon v. Mr. Prop. Mgmt. Co., 690

S.W.2d 546, 548 (Tex. 1985). If the movant’s motion and summary judgment proof facially

establish a right to judgment as a matter of law, the burden shifts to the non-movant to

raise a material fact issue sufficient to defeat summary judgment. Centeq Realty, Inc. v.

Siegler, 899 S.W.2d 195, 197 (Tex. 1995). A defendant seeking a traditional motion for

summary judgment must either conclusively disprove at least one element of each of the

plaintiff’s causes of action or plead and conclusively establish each essential element of

an affirmative defense. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995) (per curiam).

In deciding whether a genuine issue precludes summary judgment, we must treat all

evidence favorable to the non-movant as true and indulge every reasonable inference

and resolve all doubts in its favor. Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520

S.W.3d 39, 45 (Tex. 2017).

III. EXECUTORY CONTRACT

By their first issue, appellants claim they had an executory contract pursuant to

Subchapter D of the Texas Property Code, such that the trial court erred in finding that

they did not have any equitable or legal entitlement to the property. See TEX. PROP. CODE

summary judgment final and appealable.

6 ANN. § 5.062(a). Specifically, appellants assert: (1) an executory contract does not require

an option to purchase the property, (2) appellants had current possession of the property

and used and intended to use the property as their residence, and (3) an executory

contract does not require a residential lease.

A. Applicable Law

1. Contract for Deed

An executory contract, or a “contract for deed,” is a real-estate transaction that

allows the seller of the property to retain title until the purchaser has paid for the property

in full. Flores v. Millennium Interests, Ltd., 185 S.W.3d 427, 429 (Tex. 2005); Bryant v.

Cady, 445 S.W.3d 815, 819 (Tex. App.—Texarkana 2014, no pet.) (“An executory

contract for real property typically results in the buyer being entitled to immediate

possession of the property on the making of a down payment.”). “A contract for deed

differs from a conventional contract for the sale of realty, in which the seller and purchaser

mutually agree to complete payment and title transfer on a date certain at which time the

purchaser generally obtains both title and possession.” Bryant, 445 S.W.3d at 819;

Graves v. Diehl, 958 S.W.2d 468, 471 (Tex. App.—Houston [14th Dist.] 1997, no pet.)

(noting that under a contract for deed, title remains with seller until the purchase price is

paid in full, which typically occurs in installments over the course of years). A contract for

deed “serves to provide persons unable to obtain conventional mortgage financing an

alternative means of purchasing real property.” Shook v. Walden, 368 S.W.3d 604, 625

(Tex. App.—Austin 2012, pet. denied) (concluding that Subchapter D did not apply to a

conventional contract for sale of realty in which the seller and purchaser mutually agreed

7 to complete payment and title transfer on a certain date).

2. Subchapter D

Although Subchapter D does not expressly define “executory contract,” the

provisions of Subchapter D apply “to a transaction involving an executory contract for

conveyance of real property used or to be used as the purchaser’s residence.” TEX. PROP.

CODE ANN. § 5.062(a); Ferrara v. Nutt, 555 S.W.3d 227, 240 (Tex. App.—Houston [1st

Dist.] 2018, no pet.) (concluding that contracts for deeds for property to be used as the

purchaser’s residence fall within the protections of Subchapter D). Texas Property Code

Chapter 5, Subchapter D governs certain executory contracts for the conveyance of real

property and imposes several procedural requirements, including notice and disclosure

requirements, remedies upon default, and the purchaser’s right to cancel the contract.

See TEX. PROP. CODE ANN. §§ 5.061–.086 (titled “Executory Contract for Conveyance”);

Morton v. Nguyen, 412 S.W.3d 506, 510 (Tex. 2013); Smith v. Davis, 462 S.W.3d 604,

609 (Tex. App.—Tyler 2015, pet. denied) (stating that executory contracts for residential

properties are “highly regulated by the legislature”). Subchapter D was enacted to protect

purchasers who execute a contract for deed. Flores, 185 S.W.3d at 435.

B. Discussion

In their motion for summary judgment, appellees asserted that because the

contract did not contain an option combined with a residential lease, it was not an

executory contract under Subchapter D of the property code, and therefore appellants

were not subject to Subchapter D protections. See TEX. PROP. CODE ANN. § 5.062(a)(2)

(providing that under Subchapter D, “an option to purchase real property that includes or

8 is combined or executed concurrently with a residential lease agreement, together with

the lease, is considered an executory contract for conveyance of real property”).

As previously stated, Subchapter D applies to (1) conveyances of real property (2)

used or to be used as the purchaser’s residence. See id.; Ferrara, 555 S.W.3d at 240

(providing that a contract with a mandatory purchase provision, as opposed to an option

to purchase provision, falls within the ambit protections of Subchapter D of the property

code). Thus, the protections of Subchapter D are not strictly limited to executory contracts

that contain an option to purchase combined with a residential lease agreement. See id.

Here, it is undisputed that the contract was for the conveyance of real property.

Under the contract’s terms, Wright agreed to sell the property to appellants, and

appellants purchased the property from him on June 9, 2012. Moreover, it is also

undisputed that appellants used the property as a residence for over fourteen years.

Therefore, Subchapter D applies because the contract is for the conveyance of real

property used as appellants’ residence. See TEX. PROP. CODE ANN. § 5.062(a)(2).

Furthermore, Wright agreed to retain title to the property until appellants paid for

the property in full which constitutes a contract for deed. See Flores, 185 S.W.3d at 429.

It is well settled that “executory contracts” are synonymous with “contracts for deed.”5

Nguyen v. Yovan, 317 S.W.3d 261, 270 (Tex. App.—Houston [1st Dist.] 2009, pet.

denied); Yarto v. Gilliland, 287 S.W.3d 83, 90 n.10 (Tex. App.—Corpus Christi–Edinburg

2009, no pet.) (same) Zuniga v. Velasquez, 274 S.W.3d 770, 771 (Tex. App.—San

5 Appellees state that “Whatever the agreement was between Wright and the [appellants] it was certainly not an executory contract.”

9 Antonio 2008, no pet.) (same); Henderson v. Love, 181 S.W.3d 810, 812 (Tex. App.—

Texarkana 2005, no pet.) (same); see also Flowers v. Zuniga, No. 11–06–00144–CV,

2008 WL 1723225, at *1, (Tex. App.—Eastland Apr. 10, 2008, no pet.) (mem. op.) (same);

Sharp v. Smith, No. 12–07–00219–CV, 2008 WL 257237, at *1, (Tex. App.—Tyler Jan.

31, 2008, no pet.) (mem. op.) (same). Accordingly, we reject appellees’ arguments that

executory contracts require an option to purchase and a residential lease. See Weaks v.

White, 479 S.W.3d 432, 439 (Tex. App.—Tyler 2015, pet. denied) (“In 1995, the

legislature amended Chapter 5 of the property code to address serious abuses in the

Texas–Mexico border region known as “the colonias,” a rural area where many residents

were financing the purchase of their homestead properties through contracts for deed.”);

Marker v. Garcia, 185 S.W.3d 21, 25 (Tex. App.—San Antonio 2005, no pet.) (noting that

Subchapter D was enacted to provide protections for low-income individuals purchasing

property under contracts for deed in the colonias along Texas’s southern border); see

also Brooks v. Acosta, 581 S.W.3d 485, 488 (Tex. App.—Austin 2019, no pet.) (holding

that a lease-to-purchase clause was not an “option to purchase” as required to be

considered an executory contract pursuant to subchapter D, where the lease-to-purchase

clause did not contain a fixed price, merely stated the property could be purchased at

“market value,” and lacked specification how “market value” would be determined).

Next, appellees argued to the trial court that an executory contract requires

immediate possession of the property and that the parties’ contract provided for delivery

of possession after payment was made to Wright in full. Appellees cite the following:

10 After payment is made to [Wright] in full, [Wright] agree[s] to execute and deliver to [appellants] a bill of sale [deed] conveying the property to [appellants], and to deliver possession of [the property] to appellants . . . in as good condition as it now is, reasonable wear and tear excepted, and free of all liens and encumbrances.

While it is true that the contract recites Wright would deliver possession of the property

after payment was made in full, it is undisputed that appellants lived on the property as

their residence for fourteen years, gave Wright a down payment of $5,000 to purchase

the property, and made monthly installments thereafter. See Bryant, 445 S.W.3d at 819

(“An executory contract for real property typically results in the buyer being entitled to

immediate possession of the property on the making of a down payment.”). Therefore,

we reject appellees’ argument that appellants did not have possession of the property

merely because the contract recites otherwise.

C. Summary

Based on the clear and unambiguous language of the written contract, this contract

falls within the protections of Subchapter D because (1) it was a transaction involving the

conveyance of real property, (2) it is undisputed the property was used as the appellants’

residence, (3) appellants had immediate possession of the property, and (4) Wright was

to retain title to the property until appellants paid for the property in full. See TEX. PROP.

CODE ANN. § 5.062 (providing that Subchapter D applies to an executory contract that

provides for the delivery of a deed from the seller to the purchaser more than 180 days

from the date of the contract’s execution). Because this is a contract for deed and

considered an executory contract under Subchapter D, the trial court erroneously found

that appellants did not have a legal entitlement to the property. See Lightning Oil Co., 520

11 S.W.3d at 39. We sustain appellants’ first issue.

IV. NOTICE

By their second issue, appellants claim that Wright violated § 5.063 and § 5.064 of

the property code, such that the trial court erred in concluding appellants did not have a

claim to the property.

Subchapter D provides specific remedies to the aggrieved purchaser when the

seller does not comply with the statute. Section 5.064, entitled “Seller’s Remedies on

Default,” provides that a seller may enforce the remedy of rescission or of forfeiture and

acceleration against a purchaser in default under an executory contract for conveyance

of real property only if:

(1) the seller notifies the purchaser of:

(A) the seller’s intent to enforce a remedy under this section; and

(B) the purchaser’s right to cure the default within the 30–day period described by Section 5.065;

(2) the purchaser fails to cure the default within the 30–day period described by Section 5.065; and

(3) Section 5.066 does not apply.

TEX. PROP. CODE ANN. § 5.064. Section 5.063, entitled “Notice,” provides that notice must

be in writing, delivered by registered or certified mail, be conspicuous and printed in 14–

point boldface type or 14–point uppercase typewritten letters, and must include on a

separate page the statement:

12 YOU ARE NOT COMPLYING WITH THE TERMS OF THE CONTRACT TO BUY YOUR PROPERTY. UNLESS YOU TAKE THE ACTION SPECIFIED IN THIS NOTICE BY (date) THE SELLER HAS THE RIGHT TO TAKE POSSESSION OF YOUR PROPERTY.

Id. § 5.063. The notice must also identify and explain the remedy the seller intends to

enforce and specify the delinquent amount itemized into principal and interest if the

purchaser has failed to make a timely payment. Id.

In their petition, appellees filed a claim alleging that appellants violated § 5.063

and § 5.064 of the property code. Appellants requested summary judgment on appellees’

claims, asserting that because there was no contract as a matter of law, appellees’

alleged notice violations do not apply. In response to appellees’ motion for summary

judgment, appellants asserted that “at no time prior to [their eviction] had Defendant

Wright provided [appellants] with any written notice of default, notice to cure, or notice to

rescind the contract.” Appellants provided the trial court with their monthly receipts

wherein Wright failed to indicate they were in arrears for the months prior to September

2018. In the trial court and on appeal, appellees did not provide any argument or evidence

to refute appellants’ assertion that Wright did not comply with the statutory notice sections

of the property code. Because we have not been directed to evidence that Wright

attempted in good faith to comply with notice requirements, appellees did not meet their

burden of showing that no genuine issue of material fact exists and that they are entitled

to judgment as a matter of law. See TEX. R. CIV. P. 166a. Therefore, summary judgment

was improper on this basis, and we sustain appellants’ second issue.6 See id.; Nguyen,

6The record includes a document dated September 28, 2018, that appears to be an eviction notice wherein Wright stated appellants “had 5 days to be out of [the property] by October 3, 2018,” for

13 317 S.W.3d 261 at 269–70.

V. BONA FIDE PURCHASER

In their third issue, appellants claim the trial court erred when it found that

appellees were bona fide purchasers. Specifically, they assert appellees had notice of

appellants’ contract with Wright and notice of their claims to the property. Thus, the bona

fide purchaser inquiry centers on whether appellees had actual or constructive notice of

any of the competing claims to the property.

The Texas Property Code provides for the recording of real property transfers and

limits the validity of unrecorded instruments as follows: “The unrecorded instrument is

binding . . . on a subsequent purchaser who does not pay a valuable consideration or

who has notice of the instrument.” TEX. PROP. CODE ANN. § 13.001. Thus, an unrecorded

conveyance is binding on those who have knowledge of the conveyance. Burris v.

McDougald, 832 S.W.2d 707, 709 (Tex. App.—Corpus Christi–Edinburg 1992, no writ).

A person who acquires property in good faith, for value, and without notice of any third-

party claim or interest is a bona fide purchaser. Fletcher v. Minton, 217 S.W.3d 755, 758

(Tex. App.—Dallas 2007, no pet.). Status as a bona fide purchaser is an affirmative

defense to a title dispute. Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001).

“Notice” is broadly defined as information concerning a fact actually

communicated to a person, derived by him from a proper source, or presumed by law to

have been acquired. Fletcher, 217 S.W.3d at 758. Notice may be actual or constructive.

“nonpayment” and “back taxes.” There is no finding that appellants received this document.

14 Id. Actual notice results from personal information or knowledge, as well as those facts

which reasonable inquiry would have disclosed. Id. Constructive notice is notice the law

imputes to a person not having personal information or knowledge. Id.

To the trial court, appellees asserted they were without notice of a recorded

instrument as required by law, and they relied upon the absence of such a filing when

they closed on the purchase of the property on October 19, 2018. However, this argument

fails because an unrecorded instrument is binding on those that have notice of the same.

See TEX. PROP. CODE ANN. § 13.001. Second, they argued that they were “without notice

of [an] executory contract” since the contract did not “combine an option to purchase with

the right of possession under a residential lease,” and “it was clear there was no

conveyance of the property to [appellants].” This assertion, however, is based entirely

upon appellees’ erroneous legal conclusion that appellants did not have a viable claim to

the property. It is undisputed that appellees had actual notice of the contract between

Wright and appellants and appellants’ claim to the property under that contract,

irrespective of its legal significance. Moreover, in a contract for deed, the seller retains

title until the purchaser pays for the property in full, which generally occurs over a period

of years, and under this contract for deed, transfer of title was not to occur for another

four more years. See Flores, 185 S.W.3d at 429; Graves, 958 S.W.2d at 471. Thus,

appellees cannot rely on the lack of title transfer or the title commitment to assert they

were without notice of appellants’ claims to the property.

15 Appellees also claim that since appellants were in default of a promissory note,

appellees were without notice of an interest in the property. Specifically, appellees state

that a “Promissory Note is not an interest in real property or a conveyance of real property,

but is a negotiable instrument.” We reject this argument because there is no doubt that

this is a contract for deed rather than a promissory note regardless of its title, and it is

undisputed that appellees were aware of the terms of the contract for deed before they

purchased the property. Because appellees were aware that appellants purchased the

property from Wright in June 2012 before they closed on the property, they cannot assert

they were without notice of appellants’ claim to the property. See Fletcher, 217 S.W.3d at

758 (holding that a bona fide purchaser is without notice of a third-party claim or interest

to the property).

Lastly, appellees relied on their attorneys’ opinion that appellants had no

equitable or legal right to the property and “as a consequence” appellees “were innocent

purchasers.” However, their attorney’s opinion is merely his conclusion, as it appears to

him, regarding appellants’ claims; it cannot serve as a basis to assert appellees lacked

notice of appellants’ claim. See La Brie v. Cartwright, 55 Tex. Civ. App. 144, 148 (Civ.

App. 1909) (“Where a fact is known sufficient to put a purchaser on inquiry, he cannot

excuse himself from such inquiry by taking the opinion of an attorney upon an abstract of

title.”). Conversely, appellees’ query to their attorney reflects that they had actual

knowledge or suspicion of appellants’ claim to the property. More importantly, appellants

sued appellees on October 15, 2018, claiming they had had an interest in the property—

four days before appellees purchased the property on October 19, 2018. Thus, appellees

16 cannot claim that they were “without notice, constructive or actual, of any third-party claim

or interest” merely because their attorney concluded appellants did not have an executory

contract. See Madison, 39 S.W.3d at 606.

As evidence to support their assertion that appellees had actual or constructive

notice of their claims, appellants attached their affidavits wherein they averred that on

September 28, 2018, Noe purchased two money orders, which he submitted into

evidence, for September and October’s monthly payments. Wright refused to accept the

payments and instead informed Noe, as early as September 28, 2018, that he was

evicting appellants from the property because he was selling it to someone else. Noe

stated he was actively repairing the home. The record provides numerous receipts

reflecting Noe’s repair efforts including a receipt for the service of roof installation.

Fletcher, 217 S.W.3d at 758 (providing that the presence of cows, a fence, and

equipment, coupled with the observation of the owner going to and from the property

would put a reasonable person on notice). Moreover, there were visible signs of

possession of the property as appellants had personal belongings inside and outside the

property and still were paying utilities on the property.7 See id.

On October 8, 2018, Rose was alarmed to find the door to her home was open

and two Southern Builders employees were inside her home. According to appellants,

Montalvo was the owner of Southern Builders, and appellees do not contest this fact.

Rose told Montalvo’s employees she was the owner of the home, but the employees

7Appellants asserted they had their refrigerator, twin beds and dresser, tables, a weight lifting set, a washer and dryer, pictures hanging on a wall, pots and pans, clothes, boxes with personal files and paperwork, a DVD player, and other personal belongings in the house.

17 stated Wright sold the home, and they were there to change the locks. It is reasonable to

infer that appellees’ employees were changing the locks as a result of Montalvo’s

knowledge or suspicion that appellants possessed the property. The next day, the men

appeared again, and Rose called the police. No one challenges the fact that the

employees were Montalvo’s agents acting within the scope of their employment with

Southern Builders. Therefore, any notice or knowledge the employees had about

competing claims to the property is imputed to appellees. See First Fin. Dev. Corp. v.

Hughston, 797 S.W.2d 286, 292 n.2 (Tex. App.—Corpus Christi–Edinburg 1990, writ

denied) (“As a general rule, information acquired by an agent is imputed to the principal.”);

Farmer Enterprises, Inc. v. Gulf States Ins. Co., 940 S.W.2d 103, 111 (Tex. App.—Dallas

1996, no writ) (“Notice to an agent, received while the agent is acting within the scope of

his authority, constitutes notice to the principal.”).

Based on the foregoing, we conclude appellees had actual knowledge of

appellants’ claim to the property: (1) appellees had appellants’ contract for deed in their

possession at least ten days before appellees purchased the property; (2) Rose told

Montalvo’s agents that she was owner of the home and asked them to leave before

appellees purchased the property; (3) appellants sued appellees before appellees

purchased the property, claiming that they purchased the property from Wright in 2012;

and (4) possession of the property was open and visible before appellants purchased the

property. After reviewing the summary judgment evidence in the light most favorable to

appellants, we conclude that genuine issues of material fact exist regarding whether

appellees lacked notice of appellants’ claims to the property, such that they were bona

18 fide purchasers. Prowse v. Walters, 941 S.W.2d 223 (Tex. App.—Corpus Christi–

Edinburg 1996, writ denied) (“Actual or constructive notice to a subsequent purchaser will

generally validate the unrecorded conveyance as between the prior and subsequent

purchasers.”). Accordingly, the trial court erred in its granting of summary judgment in

appellees’ favor on this basis. See Lightning Oil Co., 520 S.W.3d at 39. We sustain

appellants’ third issue.

VI. STATUTE OF LIMITATIONS/LACHES

Next, appellants assert that the trial court erred in finding their rights to enforce the

contract are barred as a matter of law due to the statute of limitations or laches.

Laches is generally available as an affirmative defense solely in suits in equity and

therefore does not apply to statutory challenges. Phillips v. The Dow Chem. Co., 186

S.W.3d 121, 129 (Tex. App.—Houston [1st Dist.] 2005, no pet.). In such a suit, absent

extraordinary circumstances, the statute of limitations is the appropriate defense. Houston

Lighting & Power Co. v. City of Wharton, 101 S.W.3d 633, 638 (Tex. App.—Houston [1st

Dist.] 2003, pet. denied). Therefore, the statute of limitations is the appropriate defense,

not the equitable defense of laches as this case presents no extraordinary circumstances.

See Weaks v. White, 479 S.W.3d 432, 439 (Tex. App.—Tyler 2015, pet. denied) (holding

that the common law defenses of estoppel and laches did not apply to prevent purchaser

under contract for deed, who lived in property for 10 years, from asserting Subchapter D

violations; statute of limitations was the appropriate defense, and case presented no

extraordinary circumstances).

19 In their motion for summary judgment, appellees asserted “that the statute of

limitations or alternatively laches bars [appellants] from asserting [their claims] against

[appellees] (as well as Wright for that matter)” because those violations occurred in June

2012. However, appellants did not have a cause of action against appellees until October

19, 2018, when appellees obtained the property from Wright by warranty deed. See

Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 202 (Tex. 2011) (providing

that a cause of action accrues and the statute of limitations begins to run when facts come

into existence that authorize a claimant to seek a judicial remedy). Therefore, appellants’

claims did not arise in 2012 and were not barred by the statute of limitations. Accordingly,

the trial court erred in entering summary judgment on this basis. We sustain appellants’

fourth issue.

VII. CIVIL CONSPIRACY

By their last issue, appellants assert that the trial court erred in dismissing their

interference with a contract and civil conspiracy claims. In their summary judgment,

appellees argued: “Since there was no executory contract between Wright and

[appellants], it follows that [appellees] could not have interfered with it.” Furthermore,

appellees argued that appellants “were not owners of the Property, and so there could

not have possibly been a conspiracy to foreclose wrongfully or to interfere with any

ownership rights.” This is the extent of their argument. However, having determined that

appellants have an executory contract with Wright and because appellees presented no

other facts or evidence that appellants’ claims for civil conspiracy and interference with a

contract cannot exist, we find the trial court erred in granting summary judgment on this

20 basis. See Siegler, 899 S.W.2d at 197. We sustain appellants’ fifth issue.

VIII. CONCLUSION

We reverse the trial court’s order granting summary judgment and remand the

case to the trial court for proceedings consistent with this opinion.

JAIME TIJERINA Justice

Delivered and filed the 7th day of January, 2021.