Opinion issued May 12, 2015
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-13-01007-CV ——————————— TU NGUYEN, Appellant V. SLK & ASSOCIATES, LLC, Appellee
On Appeal from the 56th District Court Galveston County, Texas Trial Court Case No. 13-CV-0796
MEMORANDUM OPINION
Appellant, Tu Nguyen, challenges the trial court’s judgment entered in favor
of appellee, SLK & Associates, Inc. (“SLK”), declaring that SLK has title to and
possession in fee simple of the entirety of certain real property and quieting title in
and to SLK. In three issues, Nguyen contends that the trial court “exceeded its authority” in entering its judgment in favor of SLK on its counterclaim that it had
filed in response to Nguyen’s “Amended Motion for Judicial Review of
Documentation or Instrument Purporting to Create a Lien or Claim” 1; erred in
deeming admitted the authentication of certain documents; and erred in “not
conforming” with court rules and cited authority. In its briefing, SLK “suggests”
that Nguyen’s appeal is frivolous. 2
We affirm.
Background
In his Amended Motion for Judicial Review, filed on July 3, 2013, Nguyen
alleged that Relative Lending, LLC (“Relative”) had filed in the real property
records of Galveston County a fraudulent deed of trust regarding real property
located at 22509 Kennedy Drive, Galveston, Texas (the “property”). He attached
to his motion a copy of the deed of trust, which does not include the signature
page, but otherwise reflects that it was executed on December 21, 2012 to secure a
loan of $150,000.00 from Relative to Nguyen’s company, N Investment Group,
LLC (“N Investment”). Nguyen also attached to his motion a copy of a Trustee’s
Deed, which reflects that, after N Investment failed to repay the loan, Relative
1 See TEX. GOV’T CODE ANN. § 51.903 (Vernon 2013). 2 See TEX. R. APP. P. 45.
2 foreclosed on its deed of trust and SLK purchased the property at the foreclosure
sale.
Nguyen argued that Relative’s deed of trust, which he executed on behalf of
N Investment in 2012, was “fraudulent” because N Investment did not actually
exist after 2008. He further asserted that SLK’s Trustee’s Deed, which was
derived from the foreclosure on Relative’s deed of trust, was likewise invalid. And
Nguyen attached to his motion copies, certified by the Nevada Secretary of State,
of N Investment’s May 5, 2006 articles of organization; its Operating Agreement,
showing that Nguyen was its sole member and owner; and a “Certificate of
Existence with Status of Revocation,” showing that N Investment was in
revocation as of June 1, 2008. After the trial court concluded in a July 13, 2013
order that SLK’s Trustee’s Deed was invalid,3 Nguyen sent to SLK a letter,
informing it that it was “no longer the legal owner” of the property.
On July 15, 2013, SLK moved for a new trial, asserting that on December
21, 2012, Nguyen, as sole member and owner of his limited liability company, N
Investment, had “signed a collection of documents” to obtain a loan from Relative
in the amount of $150,000.00; the loan was secured by a deed of trust on the
property, which Nguyen had previously conveyed to N Investment; after N
Investment did not repay the loan, Relative foreclosed on the property; and SLK
3 See TEX. GOV’T CODE ANN. § 51.903.
3 then purchased the property at the foreclosure sale and obtained the Trustee’s
Deed. SLK further asserted that Nguyen had improperly used the trial court to
invalidate the deed of trust, which he had executed to obtain the loan from
Relative, and SLK’s Trustee’s Deed. After a hearing, the trial court vacated its
July 13, 2013 order in which it had concluded that SLK’s Trustee’s Deed was
invalid, and it granted SLK a new trial.
SLK then filed its counterclaim, asserting that after Nguyen had improperly
obtained the trial court’s July 13, 2013 order to invalidate the deed of trust, he
recorded the order in the real property records of Galveston County, impairing the
marketability of the property. SLK noted that Nguyen had also sued it in the 212th
District Court of Galveston County, making essentially the same allegations that he
had made in the trial court below and seeking a judgment to invalidate the
foreclosure sale to SLK. And he had filed a notice of lis pendens on the property.
SLK further noted that after it had answered the lawsuit in the 212th District Court
and the trial court below had directed the consolidation of the two lawsuits,
Nguyen, without notice to SLK, obtained the dismissal of his lawsuit in the 212th
District Court. SLK sought a declaration that its Trustee’s Deed is valid, it owns
record title to the property, and neither Nguyen nor N Investment has any interest
in the property. It also sought removal of Nguyen’s notice of lis pendens.
4 At an evidentiary hearing, SLK offered into evidence a certified, complete
copy of Relative’s deed of trust, which includes the signature page bearing
Nguyen’s signature. After Nguyen affirmatively stated that he did not object to the
document, the trial court admitted it into evidence. Nguyen did not testify at the
hearing, but objected to the trial court’s deeming admitted by him the
authentication of certain documents. And he contended that the trial court did not
have jurisdiction to consider SLK’s counterclaims.
In its final judgment, the trial court ordered that SLK have and recover from
Nguyen and N Investment “title to and possession in fee simple” of the property,
unencumbered by any claim or cloud that arose as a result of its July 13, 2013
order or Nguyen’s notice of lis pendens. It awarded SLK attorney’s fees in the
amount of $3,500. And it subsequently issued findings of fact and conclusions of
law. The trial court specifically found:
(1) [Nguyen] claims to own certain real property legally described as follows: Lots 14 and 39 of Sea Isle, Section 23, a subdivision of Galveston County, Texas . . . .
(2) [N Investment] is a Nevada Limited Liability company of which [Nguyen] is the sole owner and member. On December 21, 2012, [N Investment] borrowed $150,000.00 from a lender, [Relative]. The loan was secured by a deed of trust lien on the property. However, the Secretary of State had forfeited or canceled [N Investment’s] existence for failure to file an annual list of managing members and a designation of registered agent, and for failing to pay the applicable fee for those filings.
5 (3) In order to obtain the $150,000.00 loan from [Relative], [Nguyen] provided certain assurances to the title company [that] closed the transaction that his corporate entity was reinstated, so that his loan could be secured by a deed of trust lien on the property. The title company that insured the loan . . . did so based on [Nguyen’s] purported proof that he had reinstated his company with the state of Nevada, plus his affidavit that his LLC owned the property, and that the mortgage documents would be valid and enforceable obligations. . . .
(4) The title company . . . wired $105,779.01 into a bank account in the name of [Nguyen]. Another $28,456.51 was paid to the Galveston County tax assessor to pay off a judgment against [Nguyen] and [N Investment] . . . .
(5) [Nguyen] did not repay the loan, so [Relative] foreclosed its deed of trust lien. SLK . . . purchased the property at the foreclosure sale on June 4, 2013, for $185,000.00.
(6) On June 18, 2013, [Nguyen] filed a motion with this court under section 51.903 of the Texas Government Code, asking the court to find that the deed of trust that created the lien on the property in favor of [Relative] was fraudulent on its face, on the ground that N Investment, LLC, was no longer an active corporate entity when it executed the deed of trust. Proceeding ex parte, [Nguyen] obtained [the trial court’s grant of] relief. [Nguyen] then recorded that Order in the Real Property Records of Galveston County. That Order was subsequently vacated and set aside on motion for new trial filed by [SLK].
(7) Then, [Nguyen] brought suit in the 212th District Court of Galveston County, asserting essentially the same allegations made in this proceeding, and seeking that Court’s judgment invalidating the foreclosure sale to [SLK]. After [SLK] answered that suit, and after this Court directed the transfer or consolidation of that lawsuit with these proceedings. [Nguyen] moved for the dismissal of that suit and, without providing any notice to [SLK], caused that suit to be dismissed, without prejudice. However, when [Nguyen] filed his petition in the
6 212th District Court, he also filed a notice of lis pendens in the Galveston County Real Property Records. [Nguyen] presented an order to the 212th District Court, providing for the dismissal of his case, but that order failed to expunge, remove or otherwise address the notice of lis pendens which he had caused to be filed in the Real Property Records.
(8) [SLK’s] reasonable attorney’s fees amount to the sum of $3,500.00.
The trial court concluded:
(1) Because [Nguyen] has asserted his own personal claim of ownership of the property [and] because he has allowed his Nevada limited liability company to become defunct, which [Nguyen] purposefully caused to happen, and then misled a title company into believing that he had arranged to have his corporate entity reinstated, and then personally received a substantial sum of money from a lender based on those misrepresentations, [Nguyen] is now estopped form making the assertions that he has made in this proceeding, and in the 212th District Court, and in the Galveston Real Property Records, that the title to the property was vested in him in his individual capacity, free and clear of the deed of trust lien created to secure the loan.
(2) The unresolved lis pendens, coupled with the recordation of this Court’s prior order (since vacated), constitute a cloud on [SLK’s] title to the property, which [SLK] is entitled to have removed, so that title to the property may be quieted in [SLK].
(3) [SLK] is entitled to recover reasonable attorney’s fees from [Nguyen] or [N Investment] . . . .
Scope of the Proceeding
In his first issue, Nguyen argues that the trial court “acted outside its
jurisdiction” in ruling on SLK’s counterclaim because in doing so it “exceeded the
7 scope and purpose” of his Amended Motion for Judicial Review, which was
governed by statute. See TEX. GOV’T CODE ANN. § 51.903 (Vernon 2013).
Section 51.903 provides a statutory scheme to “quickly identify and remove
liens and encumbrances that are on their face patently without basis in recognized
law.” David Powers Homes, Inc. v. M.L. Rendleman Co., 355 S.W.3d 327, 338
(Tex. App.—Houston [1st Dist.] 2011, no pet.). A person who is a “purported
debtor or obligor or who owns real . . . property or an interest in real . . . property
and who has reason to believe that [a] document purporting to create a lien or a
claim against the real . . . property . . . is fraudulent” may file a motion for judicial
review with a district clerk. TEX. GOV’T CODE ANN. § 51.903(a). A trial court’s
finding on the issue “may be made solely on a review of the documentation or
instrument attached to the motion” and “made ex parte without delay or notice of
any kind.” See id. § 51.903(c). Section 51.903 limits the trial court’s
determination as to whether the document or instrument is fraudulent as defined by
section 51.901. See id. § 51.903(a), (g). A trial court may not rule on the validity
of the underlying lien or claim between the parties. See David Powers Homes, Inc.,
355 S.W.3d at 337.
A document or instrument is presumed to be fraudulent if it purports to
create a lien or assert a claim or interest against property and it:
(A) is not a document or instrument provided for by the constitution or laws of this state or of the United States;
8 (B) is not created by implied or express consent or agreement of the obligor, debtor, or the owner of the real . . . property or an interest in the real . . . property, if required under the laws of this state, or by implied or express consent or agreement of an agent, fiduciary, or other representative of that person; or
(C) is not an equitable, constructive, or other lien imposed by a court with jurisdiction created or established under the constitution or laws of this state or of the United States.
TEX. GOV’T CODE ANN. § 51.901(c)(2)(A)-(C) (Vernon 2013).
Here, in his Amended Motion for Judicial Review, Nguyen argued that
Relative’s lien was “fraudulent” because it had “accepted and caused to be
recorded a certain Deed of Trust signed by a non-existen[t] entity named N
Investment Group, LLC.” He further argued that, because the documents that he
had attached to his motion “conclusively confirmed . . . that N Investment has been
in non-existence since June 1, 2008,” Relative, “as a matter of law,” had “no legal
standing to claim to be the beneficiary of the original deed of trust” that he had
executed on behalf of N Investment in 2012. And Nguyen asserted that, although
Relative transferred the deed of trust to SLK, a “void instrument passes no title”
and “the fact that the grantee-mortgagee [SLK] is an innocent purchaser makes no
difference.” Nguyen asked the trial court to “review the attached documentation or
instrument” and “enter an order determining whether it should be accorded lien
status, together with such other orders as the court deems appropriate.”
9 We first note that the legislature enacted section 51.903 to protect citizens
from harassment and intimidation by providing an expedited review process to
address an onslaught of fraudulent liens on real and personal property being filed
in the offices of the secretary of state and district and county clerks by individuals
and organizations who refused to recognize the authority and sovereignty of the
government of the State of Texas. See Senate Research Ctr., Bill Analysis, Tex.
H.B. 1185, 75th Leg., R.S. (1997). In this case, Nguyen has not provided any
authority to support his use of section 51.903 to remove a lien that could only be
considered “fraudulent” by virtue of his own admittedly false representations made
to the lienholder to induce it to loan him $150,000.00. Indeed, he does not allege
that Relative or SLK perpetrated a fraud of any kind to obtain the lien on the
property.
Nguyen’s Amended Motion for Judicial Review does contain the
“suggested” language provided in section 51.903(a), namely, that he did “not
request the court to make a finding as to any underlying claim of the parties
involved and acknowledge[d] that this motion d[id] not seek to invalidate a
legitimate lien.” See TEX. GOV’T CODE ANN. § 51.903(a). However, the substance
of Nguyen’s motion reflects that he sought much more than a determination of
whether the deed of trust and Trustee’s Deed were facially fraudulent. Nguyen in
fact asked the trial court to review the many documents that he had attached to his
10 motion, determine that N Investment did not exist at the time that he signed the
deed of trust, and declare the invalidity of Relative’s deed of trust and SLK’s
Trustee’s Deed. See David Powers Homes, Inc., 355 S.W.3d at 338 (noting section
51.903 provides statutory scheme to quickly identify and remove only liens and
encumbrances patently without basis in recognized law).
“[T]he legal effect of a pleading in Texas is not determined by its style or
name, but by its contentions and purpose.” Krishnan v. Ramirez, 42 S.W.3d 205,
224 (Tex. App.—Corpus Christi 2001, pet. denied) (citations omitted). Here,
Nguyen, based on documents extrinsic to the four corners of the deed of trust,
requested that the trial court declare that N Investment did not exist in 2012. He
also asked that the court declare that the underlying deed of trust and Trustee’s
Deed were invalid, converting his motion into a declaratory-judgment action. See
Becker v. Tropic Isles Ass’n, No. 13–08–00559–CV, 2010 WL 877569, at *3 (Tex.
App.—Corpus Christi 2010, pet. denied) (mem. op.) (noting “by asking the trial
court to issue rulings beyond whether the challenged documents were fraudulent,”
movant, under Government Code, “converted his Motion for Judicial Review into
an action seeking a declaration” of rights). Indeed, Nguyen specifically requested
that the trial court “enter an order determining whether [SLK’s Trustee’s Deed]
should be awarded lien status, together with such orders as the court deems
appropriate.”
11 The purpose of the Declaratory Judgments Act (“DJA”) is “to settle and to
afford relief from uncertainty and insecurity with respect to rights, status, and other
legal relations; and it is to be liberally construed and administered.” TEX. CIV.
PRAC. & REM. CODE § 37.002(b) (Vernon 2015). The DJA provides in relevant
part, “A person interested under a deed . . . may have determined any question
of . . . validity arising under the instrument . . . and obtain a declaration of rights,
status, or other legal relations thereunder.” TEX. CIV. PRAC. & REM. CODE
§ 37.004(a) (Vernon 2015). A trial court may allow a defensive counterclaim for
declaratory judgment if it presents more than a mere denial of the plaintiff’s claim
and has “greater ramifications than the original suit.” See BHP Petroleum Co. v.
Millard, 800 S.W.2d 838, 841–42 (Tex. 1990); Guniganti v. Kalvakuntla, 346
S.W.3d 242, 251–52 (Tex. App.—Houston [14th Dist.] 2011, no pet.). A
counterclaim has greater ramifications than the original suit if it seeks affirmative
relief, in that it alleges a cause of action independent of the plaintiff’s claim on
which the defendant could recover benefits, compensation, or relief, even if the
plaintiff were to abandon or fail to establish his cause of action. BHP Petroleum,
800 S.W.2d at 841–42.
Here, SLK filed its counterclaim to obtain a declaration of the validity of its
Trustee’s Deed, to settle future disputes by removing the clouds created by the trial
court’s July 13, 2013 order and Nguyen’s notice of lis pendens, and to obtain an
12 award of attorney’s fees.4 Thus, SLK sought relief beyond that sought by Nguyen.
See Guniganti, 346 S.W.3d at 251–52. Accordingly, we hold that the trial court
had jurisdiction to address SLK’s counterclaim for declaratory relief.
We overrule Nguyen’s first issue.
Deemed Admissions
In his second issue, Nguyen argues that the trial court erred in deeming
admitted by him the authentication of certain documents because SLK “failed to
establish” that he “actually received” its requests for admissions. See Payton v.
Ashton, 29 S.W.3d 896, 898 (Tex. App.—Amarillo 2000, no pet.) (noting “duty to
respond does not ripen until service has been perfected”).
When a party does not respond to requests for admissions within thirty days,
the matters in the requests are deemed admitted against him and conclusively
established unless the trial court permits withdrawal or amendment of the
admissions. TEX. R. CIV. P. 198.2, 198.3; Wal–Mart Stores, Inc., v. Deggs, 968
S.W.2d 354, 355 (Tex. 1998). Withdrawal or amendment of an admission is 4 We note that the trial court awarded SLK its requested attorney’s fees, and an award of attorney’s fees is generally not permissible in a suit to remove a cloud on a title. See Sw. Guar. Trust Co. v. Hardy Road 13.4 Joint Venture, 981 S.W.2d 951, 957 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). Here, however, SLK sought more than to remove a cloud on its title to the property—it sought a declaratory judgment concerning the validity of its Trustee’s Deed. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.004(a) (Vernon 2015); see also Guniganti v. Kalvakuntla, 346 S.W.3d 242, 253 (Tex. App.—Houston [14th Dist.] 2011, no pet.). In a proceeding under the DJA, as here, a trial court may award costs and reasonable attorney’s fees as are equitable and just. See TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (Vernon 2015).
13 permitted on a showing of good cause and a finding by the trial court that (1) the
party relying on the deemed admission will not be unduly prejudiced, and
(2) presentation of the merits of the action will be served thereby. TEX. R. CIV. P.
198.3; Deggs, 968 S.W.2d at 356; Boulet v. State, 189 S.W.3d 833, 836 (Tex.
App.—Houston [1st Dist.] 2006, no pet.). “Good cause is established by showing
[that] the failure involved was an accident or mistake, not intentional or the result
of conscious indifference.” Wheeler v. Green, 157 S.W.3d 439, 442 (Tex. 2005).
Although a trial court has broad discretion to permit or deny the withdrawal
of deemed admissions, it cannot do so arbitrarily, unreasonably, or without
reference to guiding rules or principles. Id. at 443. We review a trial court’s ruling
for an abuse of discretion. Stelly v. Papania, 927 S.W.2d 620, 622 (Tex. 1996).
At the evidentiary hearing, SLK requested that the authentication of the
following documents be deemed admitted by Nguyen’s failure to answer its
requests for admissions:
(1) The documents attached to this Request as Exhibit “A” are true copies of documents which:
a. purport[] to reflect action taken, including the payment of sums necessary to reinstate [N Investment], to active corporate status with the State of its incorporation; [and]
b. were presented to [title company] in order to obtain a mortgage loan in the name of [N Investment], from [Relative] and secured by the property.
14 (2) The document attached to this Request as Exhibit “B” is a true copy of a document generated by [title company] . . . reflecting its disbursement of the proceeds of a mortgage loan in the name of [N Investment] from [Relative] and secured by the property.
(3) The document attached to this Request as Exhibit “C” is a true copy of one “Borrower’s Affidavit,” signed by [Nguyen], in order to obtain a mortgage loan in the name of [N Investment], from [Relative] and secured by the property.
(4) The document attached to this Request as Exhibit “D” is a true copy of one “Affidavit as to Debts and Liens,” signed by [Nguyen] in order to obtain a mortgage loan in the name of [N Investment], from [Relative] and secured by the property.
See TEX. R. CIV. P. 198.2(c). SLK’s requests for admissions contain a certificate
of service signed by counsel certifying that it was served on Nguyen via certified
mail, with a copy by regular mail. See TEX. R. CIV. P. 21a. After Nguyen verified
the address noted in SLK’s certificate of service, the trial court deemed admitted
the authentication of the documents as requested by SLK over Nguyen’s objection
that the certified mail receipt was returned “unclaimed” and he did not receive
SLK’s requests because he “travels.”
Nguyen argues that SLK failed to show that it perfected service of its
requests for admissions on him because it is undisputed that the certified mail
receipt was returned as “unclaimed.” However, even if we were to conclude that
the trial court erred in deeming admitted the authentication of SLK’s documents,
we will not reverse a trial court’s erroneous evidentiary ruling unless the error
15 probably caused the rendition of an improper judgment. See TEX. R. APP. P. 44.1;
Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998).
SLK, through its requests for admissions, sought only to authenticate the
documents, which the trial court admitted into evidence. See Wheeler, 157 S.W.3d
at 443 (stating requests for admissions intended to “address[] uncontroverted
matters or evidentiary ones like the authenticity or admissibility of documents”).
Nguyen, in his brief on appeal, makes only a bare assertion that the trial court’s
“error requires reversal as it was reasonably calculated to cause and did cause the
rendition of an improper judgment.”
We note that this is not a case in which merits-preclusive matters were
admitted. See id. Further, the matters in SLK’s requests were either admitted
through other evidence or do not affect the outcome of this case. By his affidavit
attached to his Amended Motion for Judicial Review, Nguyen asserts that he
“owned 100%” of N Investment, and his other evidence shows that he was its sole
member. And he did not object to the admission into evidence of the certified
copy of the complete deed of trust bearing his signature, which reflects that, on
December 21, 2012, Relative loaned N Investment $150,000.00 in exchange for a
security interest in the property. Whether Nguyen represented to Relative that N
Investment had been reinstated or that the title to the property was free of prior
encumbrances does not affect the outcome of this case.
16 Accordingly, we hold that Nguyen has not shown that the trial court’s ruling
probably caused the rendition of an improper judgment. See TEX. R. APP. P. 44.1.
We overrule Nguyen’s second issue.
Failure to “Conform” with Rules and Cited Authority
In his third issue, Nguyen contends that the trial court, in addressing the
matters raised in his first and second issues, erred in “not conforming with the
Rules of Court [and] ignoring the cited authorities thus, the trial [court] abused its
discretion.”
Having overruled his first and second issues, we further overrule Nguyen’s
third issue.
Frivolous Appeal
In its brief, SLK “suggests” that Nguyen’s appeal is frivolous. See TEX. R.
APP. P. 45. Other than noting “the potential application of Rule 45 in this case,”
“submit[ting] the context provided by the records and the briefs,” and providing a
reference to a summary calendar in a federal case, SLK does not offer a legal
argument in support of its suggestion. And SLK has not proferred an amount to
compensate it for any just damages incurred as a result of Nguyen’s appeal.
To obtain requested relief in a court of appeals, a litigant’s brief must
contain a clear and concise argument for the contentions made, with appropriate
citations to authorities and to the record. TEX. R. APP. P. 38.1(i). “This
17 requirement is not satisfied by conclusory statements.” Marin Real Estate
Partners, L.P. v. Vogt, 373 S.W.3d 57, 75 (Tex. App.—San Antonio 2011, no
pet.). A failure to provide substantive analysis of an issue or cite appropriate
authority waives the complaint. Id.; Cervantes–Peterson v. Tex. Dep’t of Family &
Protective Servs., 221 S.W.3d 244, 255 (Tex. App.—Houston [1st Dist.] 2006, no
pet.).
Accordingly, we decline to award SLK damages in this appeal.
Conclusion
We affirm the judgment of the trial court.
Terry Jennings Justice
Panel consists of Chief Justice Radack and Justices Jennings and Keyes.