Opinion
05-22-00913-CV
06-22-2023
JOHN SEAY D/B/A TALENTWISE INTERNATIONAL, Appellant v. DEL ROY FUNDS, LP, Appellee
On Appeal from the 162nd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-22-04367
Before Justices Molberg, Carlyle, and Smith
MEMORANDUM OPINION
CORY L. CARLYLE JUSTICE
John Seay d/b/a Talentwise International appeals the trial court's summary judgment against him regarding his claimed interest in certain residential real property. In two issues, Mr. Seay challenges standing and the effect of a 2021 foreclosure. We affirm in this memorandum opinion. See Tex. R. App. P. 47.4.
Background
In 2005, Milind Meshram purchased a residence at 112 Trailridge Drive in Richardson, Texas. In connection with that purchase, he signed a promissory note and executed a deed of trust securing a lien on the property.
In 2013, Mr. Meshram and Mr. Seay entered into a five-year "lease agreement with option to purchase real estate," which (1) required the "Tenant/Buyer," Mr. Seay, to make Mr. Meshram's mortgage payments pertaining to the 2005 lien as "rent for the Property" and to "pay all property taxes"; (2) gave Mr. Seay the exclusive right to purchase the property during the five-year term; (3) stated "[p]rincipal paid shall be credited to the Tenant/Buyer and deducted from the . . . lien totals in the event that the Tenant/Buyer exercises its [purchase] option hereunder"; and (4) provided that "[s]hould Tenant/Buyer default on this agreement," Mr. Meshram "shall keep all monies paid" and "has the right to terminate the contract with a 30 day notice to evict the property."
In about 2018, Mr. Meshram initiated a justice court proceeding to evict Mr. Seay for failure to make the required payments, but was unsuccessful due to Mr. Seay asserting a purported equitable interest in the property based on the agreement. On April 7, 2020, Mr. Meshram sought to extinguish any claimed interest of Mr. Seay through a foreclosure sale pursuant to Texas Property Code section 5.066, in which Mr. Meshram was the winning bidder.
See Tex. Prop. Code § 5.066 ("Equity Protection; Sale of Property"). The notice regarding the April 7, 2020 sale described the agreement as "the executory contract" and stated that "[b]y reason of default under the terms of the above captioned executory contract, the maturity of the debt evidenced by the executory contract has been accelerated" and "[s]uch interests in the [property] as are secured by the Executory Contract herein described will be sold at public auction to the highest bidder for cash."
Then, Mr. Meshram again filed a lawsuit to evict Mr. Seay. In about December 2020, with that lawsuit's appeal pending and Mr. Seay still in possession of the property and making no payments, Mr. Meshram refinanced the 2005 mortgage. Soon after that, Mr. Meshram defaulted on the refinanced loan, which resulted in a June 1, 2021 foreclosure sale of the property.
A June 2, 2021 "Correction Trustee's Deed" recorded in Dallas County's official records described the foreclosure sale buyer as Landon Hardwick. A recorded June 2, 2021 "Special Warranty Deed" described a transfer of the property from Mr. Hardwick to "Randal Lynn Holdings." A recorded "Trustee's Deed" dated June 9, 2021, stated the buyer at the June 1, 2021 foreclosure sale was "Randal Lynn Holdings, LLC" and purported to transfer the property from the foreclosure sale trustee to that entity. A recorded "Assumption Warranty Deed" dated August 23, 2021 described a transfer of the property from "Randal Lynn Holdings, LLC" to appellee Del Roy Funds, LP.
Del Roy filed this lawsuit against Mr. Seay on April 25, 2022, seeking declarations that Del Roy "is the sole and exclusive owner of the Property" and that Mr. Seay "does not maintain any interest in the [property]" and "is a tenant at sufferance." The petition asserted (1) Mr. Meshram "instituted and completed foreclosure of any interest claimed by [Mr. Seay] on the subject Property through a foreclosure sale on April 7, 2020"; (2) "Mr. Meshram's refinanced loan was foreclosed upon and that foreclosure resulted in a sale to Landon Hardwick on June 1, 2021," which "converted" Mr. Seay into a tenant at sufferance; (3) "Landon Hardwick ultimately transferred the Property to his company Randall Lynn
Holdings, LLC"; (4) "[o]n August 23, 2021, Randal Lynn Holdings, LLC transferred the Property to Del Roy Funds, LLC"; and (5) though Mr. Seay "no longer maintains any legal or equitable interest in the Property because of one or both of the foreclosures," he "refuses to vacate a residence and refuses to pay rents claiming [he] has some equitable ownership interest in the Property."
Mr. Seay filed a pro se general denial answer and asserted several affirmative defenses.
Several months later, Del Roy filed a traditional motion for summary judgment contending (1) though Mr. Seay "purports to claim some equitable ownership interest in the Property," he did not "exercise his option" during the allowed time period, and (2) regardless, "that interest has been doubly extinguished through two foreclosures that terminate his interest independently of one another," namely the April 7, 2020 and June 1, 2021 foreclosures.
Specifically, as to the April 7, 2020 foreclosure, the summary judgment motion asserted (1) Mr. Seay "defaulted under the agreement in 2018" and (2) though Mr. Seay had "never exercised the option within the time limit prescribed," Mr. Meshram complied with "the process outlined" in property code section 5.066 and thus terminated any claimed interest of Mr. Seay in the property.
As to the June 1, 2021 foreclosure, the summary judgment motion stated "a party who acquires an interest in real property that is subject to a lien may have their interest extinguished through foreclosure of that lien or through the foreclosure of a lien created from a renewal and extension of that pre-existing lien." The motion asserted the 2005 loan was "refinanced" through a "renewal and extension agreement" in about late 2020 and "[c]onsequently, [Mr. Seay's] interest remained subordinate to the renewed and extended 2005 note" and was extinguished by the June 1, 2021 foreclosure.
The exhibits attached to Del Roy's summary judgment motion included the agreement, the deeds described above, notices and other documents pertaining to the two foreclosure sales, and affidavits of Mr. Meshram and his attorney regarding those matters.
Mr. Seay filed a pro se summary judgment response asserting he "exercised his option to purchase in 2018" and "believes that his interest in the property has never been terminated" because the "purported foreclosure" on April 7, 2020, "failed to foreclose on an actual instrument securing Defendant's interest in the property." He also contended Mr. Hardwick "'purchased' the property at [the June 1, 2021] foreclosure sale in the name of a non-existent LLC."
The exhibits attached to Mr. Seay's response included, among other things, (1) a "Certificate of Formation" for "Randal Lynn Holdings, LLC" that was filed in the Office of the Secretary of State of Texas on June 2, 2021, and described Landon Hardwick as the entity's manager and registered agent, and (2) two affidavits of Mr. Seay that described his claimed "equitable interest" in the property based on the agreement and stated they were recorded in Dallas County's official records on April 26, 2019, and July 9, 2020, respectively. The trial court overruled Del Roy's objection to the certificate of formation and sustained Del Roy's authentication objections to Mr. Seay's affidavits.
At the summary judgment hearing, Del Roy abandoned its request for a declaration that it is the sole and exclusive owner of the property. Del Roy also asserted that even if the trial court were to consider Mr. Seay's excluded evidence, no fact question existed regarding the termination of his claimed interest.
The trial court signed an August 18, 2022 order (1) granting Del Roy's motion for summary judgment without stating a basis for that ruling and (2) declaring that Mr. Seay "does not possess nor maintain any interest, either equitable or legal," in the property and is a tenant at sufferance.
Analysis
Standing
Standing involves a threshold determination of whether a plaintiff has a sufficient "justiciable interest" in the suit's outcome to be entitled to a judicial determination. Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848-49 (Tex. 2005). Standing is a component of subject matter jurisdiction that cannot be waived and is reviewed de novo. See, e.g., Farmers Tex. Cnty. Mut. Ins. Co. v. Beasley, 598 S.W.3d 237, 240 (Tex. 2020).
Though the Uniform Declaratory Judgments Act provides that a person interested under a deed or written contract or whose rights or status are affected by a contract may have determined any question of construction or validity arising thereunder, see Tex. Civ. Prac. & Rem. Code § 37.004, "the UDJA does not authorize a court to decide a case in which the issues are hypothetical or contingent-the dispute must still involve an actual controversy." Sw. Elec. Power Co. v. Lynch, 595 S.W.3d 678, 684 (Tex. 2020). The test for standing where a party seeks declaratory relief requires that there "(a) shall be a real controversy between the parties, which (b) will be actually determined by the judicial declaration sought." Sneed v. Webre, 465 S.W.3d 169, 180 (Tex. 2015) (quoting Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993)). A plaintiff does not lack standing "simply because he cannot prevail on the merits of his claim." DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 305 (Tex. 2008).
We consider standing "under the same standard by which we review subject matter jurisdiction generally," which "requires the pleader to allege facts that affirmatively demonstrate the court's jurisdiction to hear the cause." Tex. Ass'n of Bus., 852 S.W.2d at 446. When, as here, standing is questioned for the first time on appeal, we construe the petition in favor of the party whose standing is questioned and, if necessary, review the entire record to determine if any evidence supports standing. Id.
In his first issue, Mr. Seay asserts summary judgment was improper because Del Roy "lacks standing to bring the suit as the property was never legally conveyed via foreclosure." According to Mr. Seay, "because the trustee on the deed of trust [in the June 1, 2021 foreclosure] purported to grant the property to an entity that did not exist and then failed to correct that error with an improper nonmaterial correction deed," "the conveyance is invalid and the chain of title is broken as to any subsequent conveyances." He asserts Randal Lynn Holdings, LLC "purported to convey the Property to [Del Roy] on August 23, 2021, despite two broken points in the chain of title: (1) never having received proper title from the [June 1, 2021] foreclosure sale, and (2) not being properly named in the purported vesting deed." He contends that "[s]ince [Del Roy] has no interest, legal or equitable, in the property in question in this case, it has no standing to pursue or defend either title or possession of the property." Additionally, he asserts in his appellate reply brief that "the chain of title by which [Del Roy] claims an ownership interest in the Property is based on the second foreclosure, rendering the outcome of the first foreclosure moot" regarding standing.
The record shows Del Roy pleaded (1) it purchased the property from Randal Lynn Holdings, LLC, which obtained it from Mr. Hardwick, the purchaser at the June 1, 2021 foreclosure sale, and (2) Mr. Seay "no longer maintains any legal or equitable interest" in the property as a result of the two foreclosures and is a tenant at sufferance. The June 2, 2021 "Correction Trustee's Deed" describes a transfer of the property to Mr. Hardwick pursuant to the 2021 foreclosure sale and thus purports to correct any mistake of originally naming a non-existing entity as the buyer. The record also contains (1) the June 2, 2021 "Special Warranty Deed" transferring the property from Mr. Hardwick to "Randal Lynn Holdings," whose address is identical to that of "Randal Lynn Holdings, LLC"; (2) the August 23, 2021 "Assumption Warranty Deed" transferring the property from "Randal Lynn Holdings, LLC" to Del Roy; and (3) the June 9, 2021 "Trustee's Deed" purporting to transfer the property from the foreclosure sale trustee to Randal Lynn Holdings, LLC.
Del Roy's pleading and the documents in the record demonstrate the existence of a genuine controversy regarding the parties' interests in the property that would be actually determined by the declarations sought. See id.; see also Yarbrough v. Brooks, No. 14-19-00748-CV, 2021 WL 3922934, at *6 (Tex. App.-Houston [14th Dist.] Sept. 2, 2021, no pet.) (mem. op.) (stating that "slight misnomer" generally "does not affect a deed's validity"). We conclude Del Roy does not lack standing regarding its declaratory judgment claim in question.
Summary judgment grounds
We review orders granting summary judgment de novo. Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018). When, as here, no grounds are specified for the ruling, we must affirm on any meritorious grounds on which judgment was requested. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). Generally, if the appellant does not challenge all possible grounds on which summary judgment could have been granted, we accept the validity of the unchallenged grounds and affirm the adverse ruling. E.g., Rivas v. Pitts, No. 05-21-00876-CV, 2023 WL 3070811, at *3 (Tex. App.-Dallas Apr. 25, 2023, pet. filed) (mem. op.) (citing Oliphant Fin. LLC v. Angiano, 295 S.W.3d 422, 423 (Tex. App.- Dallas 2009, no pet.)); see also St. John Missionary Baptist Church v. Flakes, 595 S.W.3d 211, 214-15 (Tex. 2020) (explaining that courts of appeals "retain their authority" to affirm summary judgments that may have been based on a "standalone" ground not specifically challenged on appeal).
In his second issue, Mr. Seay contends he "still holds an interest in the property because Mr. Meshram's refinance and the subsequent foreclosure did not wipe Appellant's interest." Mr. Seay asserts (1) a replacement mortgage loses its priority as against the holder of an intervening interest if the replacement mortgage prejudices the junior interest holder and (2) an increase in the principal amount prejudices the holders of junior interests. He argues that because Mr. Meshram's refinancing of the 2005 mortgage "implicitly increased the amount owed on the loan," the refinancing "prejudiced Appellant's junior interest and therefore did not relate back to the date of the original Deed of Trust, meaning that Appellant's interest was not wiped out" by the June 1, 2021 foreclosure. He also asserts that his "main evidence" supporting that position-his two above-described affidavits-was improperly excluded.
Del Roy responds, among other things, that this Court "should affirm the trial court's judgment because Appellant failed to challenge a ground upon which the summary judgment could have been granted." According to Del Roy,
Appellant's interest in the property was terminated in two independent ways. The first was Mr. Meshram's foreclosure of Appellant's contract for deed on April 7, 2020 pursuant to Chapter 5 of the Texas Property Code. The second was [the] foreclosure of Mr. Meshram's mortgage on June 1, 2021. The trial court could have granted summary judgment on either foreclosure but Appellant only challenges on appeal the [June 1, 2021 foreclosure]. Appellant's failure to challenge each ground upon which a summary judgment may be granted waives his complaint to the trial court's judgment.
As described above, at the summary judgment hearing, Del Roy abandoned its request for a declaration that it is the sole and exclusive owner of the property. Either of the two foreclosures, standing alone, could support the remaining declarations. Mr. Seay's appellate issues and arguments do not address the April 7, 2020 foreclosure as a basis for the trial court's summary judgment. Thus, we accept the validity of that unchallenged ground and affirm the adverse ruling. See Rivas, 2023 WL 3070811, at *3; Oliphant Fin. LLC, 295 S.W.3d at 423-24.
We affirm the trial court's judgment.
We note that while this appeal was pending, Del Roy asserted in a related forcible detainer appeal in this Court that Mr. Seay is no longer in possession of the property. See Seay v. Del Roy Funds, LP, No. 05-22-01316-CV, 2023 WL 2966007, at *1 (Tex. App.-Dallas Apr. 17, 2023, no pet.) (mem. op.); see also Gardner v. Martin, 345 S.W.2d 274, 276 (Tex. 1961) ("It is well recognized that a trial court may take judicial notice of its own records in a cause involving the same subject matter between the same, or practically the same, parties."). We affirm the portion of the trial court's judgment declaring Mr. Seay a tenant at sufferance only to the extent that portion has not become moot.
JUDGMENT
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee DEL ROY FUNDS, LP recover its costs of this appeal from appellant JOHN SEAY D/B/A TALENTWISE INTERNATIONAL.