Court of Appeals
Tenth Appellate District of Texas
10-23-00426-CV
Theresa Vu,
Appellant
v.
Misty Medina,
Appellee
On appeal from the
87th District Court of Limestone County, Texas Judge Amy Thomas Ward, presiding Trial Court Cause No. 31632-B
JUSTICE HARRIS delivered the opinion of the Court.
MEMORANDUM OPINION
Appellant Theresa Vu (“Vu”) appeals the trial court’s judgments granting Appellee Misty Medina’s (“Medina”) claims and awarding attorney’s fees and interest. We find that the trial court did not err in granting Medina’s motion for summary judgment, that the homestead protection allowed the trial court to properly void the conveyance of property, that the court did not err in granting money damages for Medina’s usury claims, and that the
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award of attorney’s fees present no reversible error. We find the award of prejudgment interest on Medina’s usury claim improper. We reverse the portion of the final judgment awarding prejudgment interest; otherwise, we affirm.
BACKGROUND
Medina closed on a home in Mexia, Limestone County, Texas on July 25, 2006 (the “Mexia House”). Medina received a transfer of leasehold estate and filed the transfer in the public records on July 26, 2006. Medina then filed a designation of homestead for the Mexia House in the Limestone Central Appraisal District in January of 2008. Medina never withdrew this homestead exemption.
The evidence shows that the Mexia House is the only real property Medina has ever owned. Affidavits submitted by Medina’s mother and friend state that Medina raised her children in the Mexia House. The evidence also shows that Medina’s son was living at the Mexia House and attending Groesbeck High School until at least May 2017. The affiants also stated that Medina has several dogs and that the dogs never left the Mexia House. They went on to state that most of Medina’s personal effects never left the house, either before February 8, 2017, or after. Medina regularly returned to the Mexia House, even after extended stays out of town.
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Vu, a licensed real estate broker, leased a house in Shady Shores, Texas, to Michael Tischler in 2014 (the “Shady Shores House”). Medina began a relationship with Tischler in 2016. Vu argues that Medina “moved in” with Tischler around this time. In February 2017, Tischler and Medina consulted Vu about moving into a larger house in the Lake Dallas area (the “Lake Dallas House”). Tischler and Medina entered a one-year lease on the Lake Dallas House.
Also, in early 2017, Medina and Tischler approached Vu to secure a $20,000 loan. Tischler stated it was for a legal matter and that he needed the money fast. Vu sought collateral for the loan. Medina first sought to sell the Mexia House to Vu, but after consulting with an attorney, she informed Medina that she would need to execute a Transfer of Leasehold Estate because she did not own the property in fee. Thereafter, Medina, Tischler, and Vu entered a Promissory Note Agreement on February 8, 2017 (the “Promissory Note”), wherein Vu loaned the couple $20,000, received the Transfer of Leasehold Estate, and charged interest on payments. The Promissory Note laid out a payment schedule in which Medina and Tischler would receive $18,000 and repay $34,000 within twenty-three months. Vu would hold the Transfer of Leasehold Estate as security, and once the loan was paid off, would return the Transfer of Leasehold Estate back to Medina.
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Medina and Tischler struggled to make timely payments, and on July 7, 2017, Vu recorded the Transfer of Leasehold Estate in the Limestone County records. Medina’s arrangements with Tischler “did not work out,” and she moved back into the Mexia House in December 2017.
In March 2019, Medina filed a lawsuit against Vu asserting claims for usury and violation of Article 16 of the Texas Constitution’s prohibition on pretend sales of a homestead, among other claims. As a defense to Medina’s Article 16 homestead claim, Vu asserted the affirmative defenses of estoppel and quasi-estoppel, arguing that she relied on Medina’s representations that the Mexia House was not her homestead. In 2022, Medina filed “Plaintiff’s Second Amended Traditional and No Evidence Motion for Summary Judgment” (the “2022 Second MSJ”). Among other motions related to usury, Medina sought to void the transfer of the Mexia House as a pretended sale under Article 16. She also moved for a no-evidence summary judgment on Vu’s estoppel and quasi-estoppel defenses. The trial court entered two final judgments granting the 2022 Second MSJ, one on November 29, 2023, and one on December 22, 2023, which also included interest and attorney’s fees. Vu timely appealed both judgments.
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STANDARD OF REVIEW
A trial court’s decision to grant a motion for summary judgment is reviewed de novo. BMTP Holdings, L.P. v. City of Lorena, 359 S.W.3d 239 (Tex. App.—Waco 2011), aff'd, 409 S.W.3d 634 (Tex. 2013). If a party moves for summary judgment on both traditional and no-evidence grounds, the court first considers the no-evidence motion. Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520 S.W.3d 39, 45 (Tex. 2017). “To defeat a no-evidence motion, the non-movant must produce at least a scintilla of evidence raising a genuine issue of material fact as to the challenged elements.” Id. The non- movant meets this burden if the evidence “rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.” Essex Crane Rental Corp. v. Carter, 371 S.W.3d 366, 376 (Tex. App.—Houston [1st Dist.] 2012, pet. denied). A party fails to produce a scintilla of evidence when the evidence is “so weak as to do no more than create a mere surmise or suspicion” of a fact. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). Courts review the evidence presented by the motion and response in the light most favorable to the non-moving party, crediting evidence favorable to that party if reasonable jurors could, and disregarding contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex. 2006).
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To prevail on a traditional summary judgment motion, the movant has the burden of proving that there are no genuine issues of material fact and that he is entitled to judgment as a matter of law. Carter, 371 S.W.3d at 376; TEX. R. CIV. P. 166a(c). In reviewing a summary judgment, courts must accept as true evidence in favor of the nonmovant, indulging every reasonable inference and resolving all doubts in the nonmovant's favor. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995) (citing Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548–49 (Tex.1985)).
DISCUSSION
On appeal, Vu raised four issues: (1) did the trial court err in granting Medina’s 2023 motion for summary judgment; (2) did the trial court err in granting Medina’s 2022 motion for summary judgment; (3) did the trial court err in awarding prejudgment interest on usury damages, attorney fees, and court costs; and (4) did the trial court err in not conditioning its award of appellate attorney’s fees on the success or failure of Vu’s appeal. We will address them in turn. 2023 MSJ Vu challenges both the 2022 Second MSJ titled “Plaintiff’s Second Amended Traditional and No Evidence Motion for Summary Judgment” and a 2023 motion titled “Plaintiff’s Second Traditional Motion for Partial
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Summary Judgment.” In both final judgements signed by the trial court, the language clearly grants “Plaintiff’s Second Amended Traditional and No Evidence Motion for Summary Judgment.” We find no order before this court where the 2023 motion titled “Plaintiff’s Second Traditional Motion for Partial Summary Judgment” was granted by the trial court in name or in substance. As such there is no ruling on the 2023 summary judgment motion to challenge or for this Court to review. We turn to the challenge of the trial court’s granting of the 2022 Second MSJ. Homestead Claim In part, Vu challenges the trial court’s granting of Medina’s summary judgment relating to Medina’s claim that the Mexia House was her homestead. Section 50 of Article XVI of the Texas Constitution provides, in relevant part:
No mortgage, trust deed, or other lien on the homestead shall ever be valid, except for the purchase money therefor, or improvements made thereon, as hereinbefore provided, whether such mortgage, or trust deed, or other lien, shall have been created by the husband alone, or together with his wife; and all pretended sales of the homestead involving any condition of defeasance shall be void.
When a party shows that a conveyance was intended as security for debt, with a condition of defeasance upon the payment of the debt, a pretended sale prohibited by the Constitution is shown. Anglin v. Cisco Mortg. Loan Co., 141
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S.W.2d 935, 938 (Tex. 1940). If the purchaser of a homestead, or a lender, knows or has reason to believe that a purported sale has been simulated for the purpose of fixing a lien on a homestead contrary to the constitutional prohibition, the sale and the lien are void. See Fuller v. Preston State Bank, 667 S.W.2d 214, 218 (Tex. App.—Dallas 1983, writ ref’d n.r.e.); Anglin, 141 S.W.2d at 940. The key issue in determining whether a sale is real or pretended is the factual question of whether the parties intended title to vest in the purchaser. Ketcham v. First Nat. Bank of New Boston, Tex., 875 S.W.2d 753, 756 (Tex. App.—Texarkana 1994, no writ).
The parties do not dispute that the transfer of the Mexia House created a lien on the home. The Promissory Note specified that once Medina and Tischler paid off the loan, Vu would return the deed to Medina. Thus, the only issues are (1) whether Medina is estopped from claiming the property as her homestead, and (2) whether the Mexia House was Medina’s homestead at the time of the transfer on February 8, 2017.
I. Vu failed to provide more than a scintilla of evidence that Medina should be estopped from claiming the Mexia House as her homestead.
“Misrepresentations by a homestead claimant may, under the proper circumstances, create an estoppel to claim the homestead exemption.” First Interstate Bank of Bedford v. Bland, 810 S.W.2d 277, 283 (Tex. App.—Fort
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Worth 1991, no writ). A homestead claimant may be estopped to claim the homestead exemption where physical facts open to observation lead to a conclusion that the property in question is not the homestead, the use of the property is not inconsistent with the claimant's representations that the property is disclaimed as the homestead, and the representations were intended to be and were actually relied upon by the lender. Id. at 285–86. “[T]he law is well settled that the one who wilfully or knowingly brings about a situation and withholds from an innocent party facts which it is his duty to disclose and if his failure to do so causes such innocent party to act to his prejudice, he must suffer the consequence of his own wrongful act.” Uptmor v. Janes, 210 S.W.2d 235, 238 (Tex. App.—Waco 1948, writ ref’d n.r.e.). Thus, to prevail on her estoppel defenses, Vu must show that Medina represented to Vu that the Mexia House was not her homestead, show facts consistent with these representations, and show that she relied on Medina’s representations.
Here, Vu has not shown that Medina made any affirmative representations about the homestead status of the Mexia House at all. Vu argues that Medina’s initial plan to sell the house shows that Medina intended to abandon the homestead. But this is not an affirmative representation that, at the time the conversation took place, the home was not her homestead. Vu also contends that she understood that Medina lived
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with Tischler in the Shady Shore House. This fact might support Vu’s estoppel defense if Medina had in fact made affirmative representations regarding the Mexia House’s homestead status. But again, Vu provided no evidence that on or before February 8, 2017, the date of the transfer, Medina ever made any such representations. Because Vu failed to provide any evidence Medina represented that the Mexia House was not her homestead, Vu failed to create more than “a mere surmise or suspicion” that Medina made representations regarding the homestead status of the Mexia House.
Further, Vu provided no evidence that she relied on any representation by Medina. All the evidence that Vu cites to support these defenses was struck when the trial court sustained Medina’s objections to this evidence. Further, in her deposition, Vu stated that she consulted the Limestone County Appraisal District records to determine the value of the Mexia House. These records also included Medina’s homestead designation. In the context of a pretended sale, inquiry notice is equivalent to actual notice. Fuller v. Preston State Bank, 667 S.W.2d 214, 2018 (Tex. App.—Dallas 1983, writ ref’d n.r.e.) (“knowledge of facts that would cause a prudent lender to make inquiry is equivalent to actual knowledge of the simulated character of the transaction.”). Because Vu failed to create more than a mere surmise or suspicion that she relied on any representations by Medina, and because she
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had reason to make inquiry about the homestead status of the property, Vu produced less than a scintilla of evidence to support either of her estoppel defenses. Thus, the trial court properly granted Medina’s no-evidence summary judgment motion on this defense.
II. Medina proved that, as a matter of law, the Mexia House was her homestead on February 8, 2017.
The initial burden of establishing that property is homestead property is on the person claiming its protection. Lifemark Corp. v. Merritt, 655 S.W.2d 310, 314 (Tex. App.—Houston [14th Dist.] 1983, writ ref’d n.r.e.). “It is well settled in this state that in order to establish homestead rights, the proof must show a combination of both overt acts of homestead usage and the intention on the part of the owner to claim the land as a homestead.” Id. (citing Sims v. Beeson, 545 S.W.2d 262, 263 (Tex. App.—Tyler 1976, writ ref'd n.r.e.); Prince v. North State Bank, 484 S.W.2d 405, 409 (Tex. App.—Amarillo 1972, writ ref'd n.r.e.)). “Once the claimant has established his homestead, the burden shifts to the creditor to disprove its continued existence.” Id. (citing Chalk v. Daggett, 257 S.W. 228, 232 (Tex. Comm'n App. 1924, judgment adopted)). The creditor must then overcome the presumption that the homestead continues until the creditor proves termination. Id.
“The general rule is that the testimony of interested witnesses, such as parties to the suit, merely raises a fact issue to be determined by the jury.”
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Merritt, 655 S.W.2d at 315. However, courts need not investigate intent when the land is put to homestead uses. Id. “Such actual use of the land is the most satisfactory and convincing evidence of intention.” Id.
Here, Medina points to multiple overt acts showing her intent to claim the Mexia House as her homestead. Medina offered the affidavits of Tammy DeCarlo and Norma Zuniga, Medina’s mother, showing that Medina actually used the property as a homestead. Both witnesses corroborated Medina’s claims that she had raised her family in the house since 2006, her personal belongings remained in the house, she regularly returned to the house, her dogs never left the house, and that Medina’s son attended high school at nearby Groesbeck High School until May 2017.
DeCarlo stated that she knew Medina since Medina was sixteen, and Medina never gave up her home. She said that “at no time did she ever tell me she sold her home or that she was going to lease her home out, or that she never intended to return to her home in Mexia.” Zuniga testified that she had lived in Mexia since 1998 and regularly visited her daughter and grandchildren. She stated, “At no time did (Medina) ever tell me or suggest that she was moving out of her home in Mexia with the intent not to return.”
The two affidavits, along with the Groesbeck High School records, show that Medina actually used the property as a homestead and claimed it as
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such through overt acts. Thus, the court need not investigate Medina’s intent. And even if Medina’s intent was an issue, the affidavits offer additional proof aside from Medina’s own testimony that she intended the home to be and remain her homestead.
Additionally, Medina designated her property as a homestead in 2008 pursuant to TEX. PROP. CODE §41.005(e). A “Designation of Homestead” is prima facie evidence of the person's intent to claim the property designated therein as their homestead. Barrera v. State, No. 14-04-01030-CR, 2005 WL 1691037, at *5 (Tex. App.—Houston [14th Dist.] July 21, 2005, no pet.). “This presumption may only be rebutted by clear evidence.” Id. Because Medina met her burden to show overt acts of homestead usage coupled with an intent to claim the property as a homestead, the burden shifted to Vu to rebut the presumption of homestead.
III. Vu failed to raise an issue of material fact regarding whether Medina abandoned her homestead.
A party asserting abandonment of a homestead has the burden of proving it by competent evidence. Caulley v. Caulley, 806 S.W.2d 795, 797 (Tex. 1991). To prove abandonment of a homestead, “it must be undeniably clear and beyond almost the shadow, at least (of) all reasonable ground of dispute, that there has been a total abandonment with an intention not to
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return and claim the exemption.” Rancho Oil Co. v. Powell, 175 S.W.2d 960, 963 (Tex. 1943).
Here, the evidence shows that Medina still used the home up to and after the date of the transfer on February 8, 2017. Medina’s dogs continued to live at the home. When Medina was away, her mother and Ms. DeCarlo would care for them. Her personal belongings remained in the home, and when she visited Tischler, she packed a suitcase. Her son continued to attend Groesbeck High School through May 2017.
Vu points to statements, acts, and testimony suggesting that Medina was living with Tischler on February 8, 2017. But even taking these facts as true and drawing all reasonable inferences in their favor, a reasonable juror could not disregard Medina’s continued use of the Mexia House. Though Medina’s use may have become less frequent, it did not rise to the level of abandonment. Because Vu’s evidence falls short of “undeniably clear” evidence that Medina totally abandoned her homestead, the trial court properly granted Medina’s motion for summary judgment on this point. Usury Claim Vu also challenges the award of damages for Medina’s usury claim.
While Vu seemingly does not contest that the Promissory Note was usurious, she argues that summary judgment on Medina’s usury claim was improper
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because Vu was not put on proper notice of Medina’s usury claim, because Vu corrected the usury violation, and because Medina did not demonstrate that the usurious interest was in connection with a transaction for personal, family, or household use.
In relevant part, the Texas Finance Code states:
Not later than the 61st day before the date an obligor files a suit seeking penalties for a transaction in which a creditor has contracted for, charges, or received usurious interest, the obligor shall give the creditor written notice stating in reasonable detail the nature and amount of the violation.
TEX. FIN. CODE §305.006(b).
Vu admits that months prior to the filing of the lawsuit, she received at least one letter from Medina and/or Tischler that stated “the interest rate you charge may violate the Texas Finance Code provisions for usury interest which could lead to additional statutory penalties being charged against you.” The short promissory note sets out a flat fee and origination fee of $14,500 and $2,000 respectively for a $20,000 loan. The amount is usury on its face. We are not persuaded that upon receipt of a letter containing the above- identified language, Vu would not be able to surmise the nature or amount of the violation alleged as required by statute.
While we are satisfied that the pre-suit letter constituted notice as required by TEX. FIN. CODE §305.006(b), both statute and case law allow for
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abatement in the event pre-suit notice is not provided. TEX. FIN. CODE §305.006(d); Lagow v. Hamon ex rel. Roach, 384 S.W.3d 411, 415 (Tex. App.— Dallas 2012, no pet.). After Medina filed the lawsuit on or about April 2, 2019, Medina sent another notice letter stating,
“Based on the terms of the Note providing for a $20,000.00 principal with total interest of $14,500.00 over a term of 23 months plus an origination fee of $2,000, the rate of interest charges in this instrument is greater than 37%. This rate and amount of interest is in violation of the provisions of the Texas Constitution and Finance Code prohibiting usurious interest and that you are liable for this violation to Ms. Medina for the amount of penalties and attorney’s fees as provided by applicable law.”
While clear on the face of the Promissory Note, the post-suit notice letter also details the nature and amount of the violation to satisfy TEX. FIN. CODE §305.006(b). The trial court did not err in granting summary judgment on Medina’s usury claims on the grounds of improper notice.
Following the above-mentioned notice letters and the filing of Medina’s lawsuit, Vu alleges she provided multiple cure notices correcting the usury issues. To avoid liability for a usury violation of Chapter 305 of the Texas Finance Code, the creditor must correct the violation not later than the 60th day after the date the creditor actually discovers the violation or within 60 days of receiving notice pursuant to TEX. FIN. CODE §305.006(b). See TEX. FIN. CODE §305.103(a) and §305.006(d).
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As stated, we find Vu received a proper notice of the usury claims by at least April 2, 2019. Medina argues that the timely cure letter(s) did not correct the usury issues. We agree. Vu’s May 2019 cure letter does not address the $2,000 origination fee, which was expressly identified as an issue in Medina’s April 2019 notice letter. “[A] correction of a usury violation under §305.006 & §305.103 must be just that—an acknowledgment of the existence of a usury violation accompanied by the adjustment or correction required in order to bring the transaction into compliance with the applicable usury standard.” In re Kemper, 263 B.R. 773, 784 (Bankr. E.D. Tex. 2001). Vu’s May 2019 cure letter did not fully address the usury issues and did not bring the transaction into compliance so as to avoid liability pursuant to TEX. FIN. CODE §305.103(a) or TEX. FIN. CODE §305.006(d). Because Vu is not protected by the cure defense, the trial court did not err in granting summary judgement on Medina’s usury claim.
Vu argues that a creditor is liable for usurious interest under Chapter 305 of the Texas Finance Code only if that interest is charged “in connection with a transaction for personal, family, or household use.” TEX. FIN. CODE §§305.001(a) & 305.002(b). Vu cites to no case law defining what constitutes personal, family, or household use. We are not inclined to presume that the loan was not for personal, family, or household use.
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We find that the trial court did not err in granting a money judgment for Medina’s usury claim. Prejudgment Interest Vu challenges the award of prejudgment interest on Medina’s usury claim. Texas case law has settled that the recovery of prejudgment interest for a usury claim is not authorized. Steves Sash & Door Co. v. Ceco Corp., 751 S.W.2d 473, 476 (Tex. 1988). As such, we reverse that portion of the final judgment awarding prejudgment interest and render a take-nothing judgment on the prejudgment interest award. Attorney’s Fees Vu challenges the summary judgement award of attorney’s fees on the basis that the award was not conditioned upon Medina’s successful appeal. An appellate court generally reviews a trial court's decision to award appellate attorney’s fees for an abuse of discretion. See Ventling v. Johnson, 466 S.W.3d 143, 155 (Tex. 2015). If the party awarded attorney's fees is successful on appeal, then the trial court's omission of conditional language is not reversible error. Arena v. Arena, 822 S.W.2d 645, 651 (Tex.App.—Fort Worth 1991, no writ). Because we affirm the trial court’s final judgements on all but the prejudgment interest issue, we find that Medina is successful on
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appeal. Therefore, the final judgment’s omission of conditional language in awarding attorney’s fees is harmless error. We overrule Vu’s final issue.
CONCLUSION
We reverse the portion of the final judgment awarding prejudgment interest and render a take-nothing judgment on the prejudgment interest award. Otherwise, we affirm.
LEE HARRIS
Justice
OPINION DELIVERED and FILED: August 31, 2026 Before Chief Justice Johnson, Justice Smith, and Justice Harris Affirmed in part Reversed and rendered in part CV06