Opinion
No. 05-08-00069-CV
Opinion issued July 8, 2009.
On Appeal from the 116th Judicial District Court Dallas County, Texas, Trial Court Cause No. 06-05291-F.
Before Justices WRIGHT, MOSELEY, and FRANCIS.
MEMORANDUM OPINION
In this case involving competing claims to residential property, Alberto Pagan Reyes appeals the trial court's summary judgment in favor of The Bank of New York, Trustee. In three issues, appellant challenges the superiority of BONY's mortgage lien over his sheriff's deed. We affirm.
Matthew Harden Jr., a prior owner of the property in dispute, failed to pay homeowner's association fees, and the HOA obtained a default judgment for $3,317.44. The judgment also foreclosed the assessment lien and included an order of sale to the sheriff. The HOA filed an abstract of judgment in the county records on June 14, 2005, and the sheriff executed on the property in September and posted the sale for November 1.
On October 13, nineteen days before the sheriff's sale, Harden sold the property for $615,000 to Ashli Henderson, who financed her purchase through WMC Mortgage Corporation. At the time of the sale, Deutsche Bank held the first mortgage lien on the property. Most of the WMC loan was used to pay off Deutsche Bank's first mortgage lien against the property. WMC recorded its deed of trust in the Dallas County property records on October 25 and later assigned the note and deed of trust to BONY.
Although the closing documents reflect a disbursement to pay off the HOA assessment lien, the lien was not paid off for reasons not established by the record. Consequently, the sheriff's sale was held on November 1, and appellant was the successful bidder in the amount of $5,000 and received a sheriff's deed to the property.
Appellant filed a trespass to try title suit against BONY and sought a declaration that his sheriff's deed was superior to any claim by BONY (Henderson is not a party to this appeal). He alleged that on the day he bought the property at the sheriff's sale, he succeeded to Harden's interest as it existed on the date of the default judgment (May 16, 2005). Appellant asserted that had a reasonable inquiry been made, BONY (or its predecessors) would have been aware of the HOA lien, the litigation resulting in the default judgment, the order of sale, and the sheriff's sale scheduled for a date three weeks after the conveyance by Harden to Henderson. He maintained he was the owner of the property "free and clear of any claim" by BONY.
BONY counterclaimed, seeking a declaration that its lien was superior to any title or interest held by appellant. BONY asserted, among other things, that it was equitably and contractually subrogated to the prior first mortgage lienholder's position and sought summary judgment on that basis, as well as others. The trial court granted BONY's motion, and this appeal ensued.
In his first two issues, argued together, appellant asserts the doctrine of equitable subrogation does not apply here because WMC, who assigned the note to BONY, voluntarily paid the debt of Harden. In response, BONY initially argues that appellant has failed to challenge all grounds raised in its motion for summary judgment and has therefore waived his appeal. Additionally, BONY argues WMC did not voluntarily pay off Harden's debt. Giving a liberal construction to appellant's brief, we will assume he has properly challenged all grounds for summary judgment raised below and address the "voluntary" argument.
The standard of review for summary judgment is well established. See Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). We review a summary judgment de novo to determine whether a party's right to appeal was established as a matter of law. Dickey v. Club Corp., 12 S.W.3d 172, 175 (Tex.App.-Dallas 2002, pet. denied).
Equitable subrogation is a "legal fiction" whereby "an obligation, extinguished by a payment made by a third person, is treated as still subsisting for the benefit of this third person, so that by means of it one creditor is substituted to the rights, remedies, and securities of another." Murray v. Cadle Co., 257 S.W.3d 291, 299 (Tex.App.-Dallas 2008, pet. denied) (quoting First Nat'l Bank of Houston v. Ackerman, 70 Tex. 315, 319-20, 8 S.W. 45, 47 (1888)). It essentially allows a subsequent lienholder to take the lien-priority status of a prior lienholder. Id. It applies "in every instance in which one person, not acting voluntarily, has paid a debt for which another was primarily liable and which in equity should have been paid by the latter." Frymire Eng'g Co., Inc. v. Jomar Int'l, Ltd., 259 S.W.3d 140, 142 (Tex. 2008) (quoting Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co., 236 S.W.3d 765, 774 (Tex. 2007)). A payment is voluntary when the payor acts "without any assignment or agreement for subrogation, without being under any legal obligation to make payment, and without being compelled to do so for the preservation of any rights or property." Id. at 145 (quoting First Nat'l Bank of Kerrville v. O'Dell, 856 S.W.2d 410, 415 (Tex. 1993)). Texas courts are "liberal in their determinations that payments were made involuntarily." Id. (quoting Keck, Mahin Cate v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 20 S.W.3d 692, 702 (Tex. 2000)).
Appellant argues the Deutsche Bank lien was paid off at the request of Henderson, who was not obligated on the underlying debt, and was not paid off at the request of the original debtor, Harden. Thus, appellant argues, WMC acted as a volunteer when it paid the debt. As evidence, he relies on language in the subrogation clause of the Henderson Deed of Trust, which provides that "[a]ny of the proceeds of the Note used to take up outstanding liens against all or any part of the Property have been advanced by Lender at Borrower's request and upon Borrower's representation that such amounts are due and secured by valid liens against the Property." (Emphasis added.)
Initially, we note that this same subrogation clause also provides that "[l]ender shall be subrogated to any an all rights, superior titles, liens and equities owned or claimed by any owner or holder of any outstanding liens and debts, regardless of whether said liens or debts are acquired by Lender by assignment or are released by the holder thereof upon payment." Further, the evidence shows that Harden signed a sales contract for the property, indicating his intent to sell the property to Henderson. In Paragraph 19 of the contract, Harden represented "that as of the Closing Date (a) there will be no liens, assessments, or security interests against the Property which will not be satisfied out of the sales proceeds. . . ." The payoff statement sent to Harden prior to closing reflected the payoff amount was $475,756.92, and the HUD-1 settlement statement, signed by Harden, showed a payoff to the first mortgage lienholder. Additionally, Harden asserted in his affidavit he "intended to and was required to convey the Property" to Henderson without any liens and he expected any liens against the property, including the deed of trust held by Deutsche Bank, to be paid off at closing out of the sale proceeds.
We conclude this evidence conclusively establishes the Deutsche Bank loan was paid off with WMC proceeds at Harden's request, and WMC was not a stranger or volunteer when doing so, despite the language relied on by appellant. See Cadle Co., 257 S.W.3d at 301 (concluding evidence sufficient to establish request by debtor and property owner to payoff debt when settlement statement, signed by property owner, showed "reduction in amount due the seller" of $496,927.76 as "payoff first mortgage."); Leonard v. Brazosport Bank of Tex., 628 S.W.2d 216, 219 (Tex.App.-Houston [14th Dist.] 1982, writ ref'd n.r.e.) (concluding lender secured by deed of trust was contractually and equitably subrogated to valid lien right of prior lender and was not "volunteer" when evidence showed sellers present at transaction, consented to portion of loan proceeds being paid to satisfy outstanding obligation, and deed of trust contained similar language of subrogation rights in deed of trust as case at hand); cf. Fleetwood v. Med Ctr. Bank, 786 S.W.2d 550, 552, 554 (Tex.App.-Austin 1990, writ denied) (exact language in deed of trust as that relied on by appellant in this case did not render lender mere volunteer "ineligible for subrogation as matter of law").
To the extent appellant suggests summary judgment was improper because the trial court improperly balanced the equities, we note the only issue relating to equitable subrogation raised by appellant in his response to the motion for summary judgment was that WMC voluntarily paid the debt. Any issue not expressly presented to the trial court in a written motion or response may not be raised as grounds for reversal on appeal. In re A.L.H.C., 49 S.W.3d 911, 915 (Tex.App.-Dallas, pet. denied). Because appellant did not raise any issue with respect to equitable subrogation other than "voluntariness" in his response, we limit our review to that complaint. We overrule the first and second issues. Our disposition of these issues makes it unnecessary to address the third issue.
We affirm the trial court's judgment.