Summary
recognizing that there is no legal authority that requires recording promissory-note assignments
Summary of this case from Harris Cnty. Tex. v. Merscorp Inc.Opinion
No. 05-10-01648-CV
06-04-2012
KCB EQUITIES, INC., Appellant v. HSBC BANK USA, NATIONAL ASSOCIATION, Appellee
AFFIRM; Opinion Filed June 4, 2012.
On Appeal from the 68th Judicial District Court
Dallas County, Texas
Trial Court Cause No. 10-03922-C
MEMORANDUM OPINION
Before Justices Bridges, FitzGerald, and Lang
Opinion By Justice FitzGerald
KCB Equities, Inc. (“KCB”) appeals from the trial court's judgment, which orders that KCB take nothing and finds in favor of appellee HSBC Bank USA, National Association (the “Bank”) on the latter's declaratory judgment action. The judgment specifically finds that (1) the Bank has a valid and subsisting lien against the real property at issue in this case (the “Property”), to which KCB's interests are subject; (2) the promissory note secured by that lien (the “Note”) is in default; (3) the Bank is entitled to enforce the lien against the Property by means of a non-judicial foreclosure; and (4) any liens placed on the Property by KCB are released upon entry of the judgment. The judgment also awards the Bank attorney's fees in the amount of $2000. In this Court, KCB raises five issues, challenging the sufficiency of the evidence that the Bank is the owner and holder of the Note and the deed of trust securing the mortgage on the Property, and contending that KCB-rather than the Bank-is entitled to recover attorney's fees. We affirm the trial court's judgment.
Sara Jones originally purchased the Property at issue in this case for $154,000. Jones executed the Note and a deed of trust in favor of her original mortgagor. The deed of trust was recorded in Dallas County's property records. Jones subsequently failed to pay dues and assessments owed to her homeowner's association, and the association foreclosed its lien on the Property to recover those amounts due. At the foreclosure sale, KCB purchased the Property from the association for $2,600. Subsequently, because Jones was also in default on her mortgage, the Bank posted the property for foreclosure. KCB filed suit the day before the scheduled foreclosure sale, seeking injunctive relief to stop the foreclosure and seeking a declaration that: the Bank is not the holder of the Note secured by the deed of trust, and the Note has been discharged; the deed of trust lien does not remain a valid first deed of trust lien; or, alternatively, KCB has the right to service any note secured by existing superior liens on the Property. The court issued a temporary restraining order stopping the foreclosure sale. Trial was before the court. KCB appeals.
In its first through fourth issues, KCB challenges the legal and factual sufficiency of the evidence establishing the Bank's right to foreclose on the Property, i.e., evidence that the Bank is the owner and holder of the Note and deed of trust lien against the Property. In a legal sufficiency review, we consider the evidence in the light most favorable to the verdict and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We ask whether the evidence-crediting favorable evidence if reasonable jurors could and disregarding contrary evidence unless reasonable jurors could not-would permit reasonable and fair-minded people to reach the verdict under review. Id. at 827. In our factual sufficiency review, we consider all the evidence; we will set aside the finding only if the evidence supporting the finding is so weak or so against the overwhelming weight of the evidence that the finding is clearly wrong and unjust. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001).
Our review of the record establishes that there is no question of fact concerning whether the Bank owns the Note. The Bank produced the original Note at trial, and it produced the instrument-titled Assignment, Assumption and Recognition Agreement-by which the Note was assigned to the Bank. KCB itself produced the deed of trust, which by its terms secures payment of the Note. The Bank offered testimony of its mortgage officer that the Note was in default. Therefore, because the Bank owns the Note, it has the right to foreclose on the Property.
It is undisputed that KCB purchased the Property through foreclosure of the homeowner's association's junior lien. “[T]he successful bidder at a junior lien foreclosure takes title subject to the prior liens.” Conversion Props., L.L.C. v. Kessler, 994 S.W.2d 810, 813 (Tex. App.-Dallas 1999, pet. denied). Thus, KCB purchased the Property charged with the primary liability for the payment of the mortgage. See id. But KCB contends it should take the Property free of the mortgage because the assignment of the Note to the Bank was not recorded in public property records. KCB offers no authority, and we have located none, that requires the recording of assignments of a Note. KCB acknowledged at trial it had actual notice of the deed of trust before it purchased the Property. It also had actual notice that the debt secured by the deed of trust had not been released. The fact KCB may not have known the identity of the party presently holding the Note did not change the fact that it purchased the Property subject to the senior lien.
We conclude-under both legal and factual sufficiency standards-ample evidence supports the trial court's judgment declaring the Bank has the right to enforce its lien against the Property by way of non-judicial foreclosure. We overrule KCB's first through fourth issues. Given our resolution of those issues, we need not address KCB's fifth issue concerning its request for attorney's fees.
We affirm the trial court's judgment.
KERRY P. FITZGERALD
JUSTICE
101648F.P05
Court of Appeals Fifth District of Texas at Dallas JUDGMENT
KCB EQUITIES, INC., Appellant
V.
HSBC BANK USA, NATIONAL ASSOCIATION, Appellee
No. 05-10-01648-CV
Appeal from the 68th Judicial District Court of Dallas County, Texas. (Tr.Ct.No. 10- 03922-C).
Opinion delivered by Justice FitzGerald, Justices Bridges and Lang participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED. It is ORDERED that appellee HSBC Bank USA, National Association recover its costs of this appeal from appellant KCB Equities, Inc..
Judgment entered June 4, 2012.
KERRY P. FITZGERALD
JUSTICE