Opinion
NO. 09-18-00451-CV
11-12-2020
JANICE D. SYPHRETT AND BOBBY E. SYPHRETT, Appellants v. NATIONSTAR MORTGAGE COMPANY, L.L.C., DBA CHAMPION MORTGAGE COMPANY AND GENERATION MORTGAGE COMPANY, Appellees
On Appeal from the 410th District Court Montgomery County, Texas
Trial Cause No. 16-06-07514-CV
MEMORANDUM OPINION
In this appeal, Janice ("Janice") and Bobby ("Bobby") Syphrett (collectively "the Syphretts," "Appellants," or "Plaintiffs") appeal eight orders granting summary judgments to Generation Mortgage Company ("Generation") and Nationstar Mortgage Company, L.L.C. d/b/a Champion Mortgage Company ("Nationstar") (collectively "Appellees" or "Defendants"), ruling on objections to summary judgment evidence, and denying the Syphretts' Motion for De Novo Hearing and to Vacate Two Orders. We affirm in part and dismiss in part.
Background
In 2006, the Syphretts purchased a home at 11 Snow Pond Place in The Woodlands, Texas, from Bobby's company, S & E Operations, Inc. ("S & E") and also executed a promissory note payable to S & E for about $600,000. On December 4, 2009, Bobby signed a Closed-End Fixed Rate Texas Home Equity Conversion Loan Agreement ("reverse mortgage") with Generation, secured by a deed of trust in favor of Generation. At that time, Janice was not a borrower because she was not sixty-two years old. Upon closing on the reverse mortgage, $182,000 was paid to S & E to release its lien, $17,376.22 was paid to the Montgomery County Tax Office for back taxes, and $122,467.65 was paid to Bobby. Servicing of the loan transferred from Generation to Nationstar as of May 1, 2015.
A reverse mortgage allows homeowners age sixty-two or older to convert home equity into payments or advances made by the lender to the homeowner during the life of the homeowners. See Washington-Jarmon v. OneWest Bank, FSB, 513 S.W.3d 103, 105 (Tex. App.—Houston [14th Dist.] 2016, no pet.). An initial advance may be paid by the lender at closing to cover closing costs and to pay off any existing liens. See id. Generally, the repayment of the money is not due until the death of the homeowners, unless they sell or transfer the home, permanently cease occupying the home as their principal residence, or fail to properly maintain the property, fail to timely pay property taxes and insurance premiums, or fail to maintain the priority of the reverse mortgage lien. Id. Typically the debt becomes due upon the death of the last surviving homeowner. See id. "A reverse mortgage is underwritten based on the appraised value of the home equity and the loan term or the homeowner's actuarial life expectancy." Larsen v. OneWest Bank, FSB, No. 14-14-00485-CV, 2015 Tex. App. LEXIS 11474, at *11 (Tex. App.—Houston [14th Dist.] Nov. 5, 2015, no pet.) (mem. op.).
Plaintiffs' Original Petition
On June 29, 2016, Janice and Bobby filed an Original Petition against defendants Generation, Nationstar, and Elsa Laura Garcia, and on October 2, 2017, Janice and Bobby filed their First Amended Petition. The Syphretts alleged that the Defendants "induced" Janice to convey title to her home to Bobby by "affirmatively and falsely representing to the Syphretts that they would have the rights to use, enjoy, and occupy the Home until they both had died and by failing to disclose to the Syphretts that, upon Bobby Syphrett's death, Janice Syphrett would be homeless." The Syphretts also alleged that Generation and Nationstar had falsely represented to the Syphretts that Generation and Nationstar had procured homeowners insurance covering the Syphretts' home, but that after attempting to make claims on the insurance, the Syphretts discovered "[t]here simply was no insurance, even though Defendants charged the Syphretts for the insurance premiums." According to the Syphretts, their home sustained substantial damage on September 12, 2014 and on April 19, 2015, and when they attempted to make insurance claims, they discovered that there was no insurance, that the Syphretts had been charged for "fictitious insurance policies[,]" and as a result, the Syphretts faced uninsured losses.
On January 8, 2019, the trial court entered an order dismissing with prejudice all claims by the Syphretts against Elsa Garcia. Elsa Garcia is not a party to this appeal and the Syphretts did not appeal this order. We discuss the claims against Garcia herein only as necessary to our disposition of the issues before us.
The Syphretts stated claims against the Defendants for (1) violations of the Texas Deceptive Trade Practices Act (DTPA), (2) violations of the Texas Insurance Code, (3) statutory real estate fraud, (4) common law fraud, and (5) negligent misrepresentation. The Syphretts also sought a declaratory judgment, seeking a declaration that
A. The Syphrett loan with Defendants is not and has not been in default.
B. The payoff for the mortgage loan as of February 29, 2016, was no more than $506,534.59, not the $581,183.04, which Defendants have contended.
C. Janice Syphrett's alleged conveyance in 2009 is null, void, and of no effect, because Defendants procured that conveyance by fraud and without consideration.
On October 4, 2017, Generation filed a First Amended Answer asserting a general denial and affirmative defenses that the Syphretts' claims are barred by (1) their failure to comply with the terms of the loan, perform conditions precedent, and to timely submit insurance claims; (2) the economic loss rule; (3) failure to mitigate damages; and (4) statute of limitations.
We list here only those affirmative defenses that relate to the motions for summary judgment and issues on appeal.
Motions for Summary Judgment
Defendant Generation's Traditional Motion for Summary Judgment
Generation filed a traditional motion for summary judgment and argued that the Syphretts' claims fail as a matter of law because (1) the loan documents, including the ownership interest certification the Syphretts signed, disclose the circumstances under which the loan could be declared due and payable; (2) the Syphretts' claim that the reverse mortgage loan would become due and payable upon Bobby's death is moot due to recent changes in the law; and (3) any complaint about the origination of the loan is barred by limitations. According to Generation, because Janice was not yet sixty-two years of age at the time the loan agreement was executed, she was not eligible to be a borrower. Generation alleged that loan documents, namely a document titled "Ownership Interest Certification (Non-borrowing spouse)[,]" signed by the Syphretts disclose that the loan would become due and payable if Bobby predeceased Janice. Generation also argued that the terms of the loan and deed of trust are clear and unambiguous, and that by signing the note, Bobby acknowledged that he accepted and agreed to its terms, and that by signing the deed of trust, both Janice and Bobby acknowledged and agreed to the conveyance.
Generation further argued that the statute of limitations bars the Syphretts' claims because the Syphretts signed the agreements, the ownership interest certification, and the warranty deed on December 4, 2009, almost seven years before filing this lawsuit. According to Generation, the longest limitations period applicable to the Syphretts' claims would be four years. See Tex. Bus. & Com. Code Ann. § 17.565 (two-year limitations period for DTPA claims); Tex. Civ. Prac. & Rem. Code Ann. § 16.004(a)(4) (four-year limitations period for fraud); Tex. Ins. Code Ann. § 541.162 (two-year limitations period for claims under the Insurance Code); Ford v. Exxon Mobil Chem. Co., 235 S.W.3d 615, 617 (Tex. 2007) (four-year limitations period for statutory fraud); Tex. Am. Corp. v. Woodbridge Joint Venture, 809 S.W.2d 299, 302 (Tex. App.—Fort Worth 1991, writ denied) (two-year limitations period for negligent misrepresentation).
As to the Syphretts' claims relating to insurance, Generation argued that although the loan required Bobby to maintain insurance coverage, because Bobby allowed his insurance policy to lapse, Generation obtained insurance covering the property, and the property was insured "at all times complained of by the Syphretts." Generation attached to its motion for summary judgment copies of "Evidence of Insurance" documents reflecting coverage from April 1, 2013 through April 1, 2016, through American Modern Home Insurance Company ("American Modern") and showing Bobby Syphrett as the mortgagor and Generation as the mortgagee for the property. Generation denied it made any misrepresentations regarding insurance and asserted that it had informed Bobby repeatedly that it would obtain coverage at his expense to protect Generation's interest in the property. In support of this assertion, Generation attached letters from Generation to Bobby dated August 5, 2013; September 3, 2013; November 27, 2013; February 20, 2014; April 1, 2014; February 17, 2015; and April 7, 2015. Each of these letters stated that, if Generation did not receive proof of insurance by a designated date, it would obtain coverage at Bobby's expense that would likely be more expensive than what Bobby could obtain through an agent of his choice and might not be sufficient to restore the property in the event of a significant loss. Loan documents attached to the motion for summary judgment stated the parties agreed that Bobby, as the borrower, was obligated to insure the property and authorized Generation to obtain an insurance policy if Bobby failed to do so. Generation also attached portions of a transcript of Bobby's deposition in which he agreed that he was responsible for insuring the property. According to Generation, it made no misrepresentation because the loan agreement authorized it to obtain insurance if Bobby did not.
In addition, Generation argued that the Syphretts' claim under the Insurance Code fails as a matter of law because Generation was not engaged in the business of insurance, citing to section 541.002(2) of the Insurance Code, and did not commit an unfair or deceptive act or practice. See Tex. Ins. Code Ann. § 541.002(2) (defining a "person" against whom a claim may be brought under the code as "an individual, corporation, association, partnership, reciprocal or interinsurance exchange, Lloyd's plan, fraternal benefit society, or other legal entity engaged in the business of insurance, including an agent, broker, adjuster, or life and health insurance counselor[]"). Generation argued that "[i]t is undisputed [that] American Modern was the insurance company; not Generation."
Generation alleged that it was entitled to summary judgment on the Syphretts' claims under the DTPA because the Syphretts are not consumers as defined by the DTPA and the reverse mortgage was purely a transaction involving a loan of money. According to Generation, the DTPA defines a consumer as one who purchases goods or services, and a loan transaction that is not incidental to the purchase of property is not covered by the DTPA. Generation additionally argued that a contractual obligation to reimburse a lender for insurance premiums does not constitute the purchase of a good or service under the DTPA. Generation argued that the Syphretts' claim for statutory real estate fraud fails as a matter of law because section 27.01 of the Business and Commerce Code applies only to a contract for the sale of land or stock and not to a loan transaction, citing to Burleson State Bank v. Plunkett, 27 S.W.3d 605, 611 (Tex. App.—Waco 2000, pet. denied), Texas Commerce Bank Reagan v. Lebco Constructors, Inc., 865 S.W.2d 68, 82 (Tex. App.—Corpus Christi 1993, writ denied), and Greenway Bank & Trust v. Smith, 679 S.W.2d 592, 596 (Tex. App.—Houston [1st Dist.] 1984, writ ref'd n.r.e.). Generation also argued that the Syphretts' claims for common law fraud and negligent misrepresentation are barred by the economic loss rule because the only injury claimed relates to the lender-placed insurance, which are economic damages governed by the loan agreement.
Finally, Generation argued that the Syphretts were not entitled to declaratory relief as to Generation because Generation no longer has any interest in the loan or the property and there was no existing controversy between them regarding the declarations sought. According to an attached affidavit of Diane Coats, a former vice president for Generation, servicing of the Syphrett loan transferred to Nationstar on May 1, 2015.
Defendant Generation's No-Evidence Motion for Summary Judgment
Generation also filed a No-Evidence Motion for Summary Judgment. Generation alleged there was no evidence to support the Syphretts' claims under the DTPA because the Syphretts are not "consumers" of goods or services as defined by the DTPA; there was no evidence Generation committed a false, misleading, or deceptive act in connection with goods or services; and it alleged as a matter of law the DTPA does not apply to loan transactions. Generation also argued there was no evidence to support the Syphretts' claims under the Insurance Code because Generation is not a "person" as defined by the Code, it committed no act or no deceptive act in the business of insurance, and the Syphretts were not the insured under any insurance policy relevant to this lawsuit. Generation argued there was no evidence to support the Syphretts' claims for statutory real estate fraud because there was no real estate transaction between Generation and the Syphretts and section 27.01 of the Business and Commerce Code does not apply to a loan transaction. According to Generation, there was no evidence of scienter to support the Syphretts' common law fraud claims and no evidence that the Syphretts' reliance upon a representation by Generation caused an actual injury to the Syphretts. Generation argued there was no evidence to support the Syphretts' claim for negligent misrepresentation because there was no evidence that Generation misrepresented an existing fact in the course of business dealings and no evidence that a negligent misrepresentation by Generation proximately caused the Syphretts' claimed injury. Generation further argued there was no evidence to support the Syphretts' request for declaratory judgment because there is no evidence of a justiciable controversy between it and the Syphretts to support the requested declarations, no evidence that the loan was not in default, and no evidence that Janice's conveyance to Bobby was procured by fraud. Finally, Generation argued that the Syphretts' claim for mental anguish damages fails because there was no evidence that Generation committed an act with the specific intent to cause substantial injury or harm to them, and the Syphretts' claim for exemplary damages fails because there was no evidence that Generation's conduct amounted to fraud, malice, or gross negligence.
Defendant Generation's Reply in Support of Its Traditional and No-Evidence Motions for Summary Judgment
In its Reply in support of its motions for summary judgment, Generation argued that the Syphretts had not pleaded the discovery rule, but that even if they had, the discovery rule would not apply to their claims for fraud because the injury claimed by the Syphretts is not inherently undiscoverable. According to Generation, the summary judgment evidence reflected that not only did the Syphretts sign the loan documents, but the deed transferring Janice's interest was recorded and a matter of public record. Generation alleged that a party is presumed to know and accept the terms of a contract it signs and that the terms and contents of the general warranty deed signed by Janice "clearly disclose" that it is a general warranty deed.
Defendant Nationstar's Motion for Traditional and No-Evidence Summary Judgment
Nationstar filed a Motion for Traditional and No-Evidence Summary Judgment. According to Nationstar, Bobby admitted in his deposition that he failed to pay property taxes and that he allowed his insurance to lapse. When Bobby failed to provide proof of insurance, Generation obtained a lender-placed insurance policy to protect its interest in the property for the period of April 1, 2013 through April 1, 2016. According to Nationstar, it obtained lender-placed insurance on the property after servicing of the loan transferred from Generation to Nationstar.
Regarding the Syphretts' insurance claims, Nationstar alleged as follows:
On August 20, 2015, Bobby filed a claim with American Modern Home Insurance Company for damages the property allegedly sustained on April 16, 2015. American Modern processed this claim and paid a total of $22,166.23. The property was covered for the April 16, 2015 event by Generation's master policy MB-10-6821-1049 under the certificate in force from April 1, 2015 to May 1, 2015. On May 11, 2017, Bobby filed a claim with American Modern for damages the property allegedly sustained on September 12, 2014. American Modern closed this claim on June 21, 2017 because Bobby failed to respond to requests to inspect the property. The property was covered for the September 12, 2014 event by Generation's master policy BM-10-6821-1049 under the certificate in force from April 1, 2014 through April 1, 2015.In support of these allegations, Nationstar attached copies of "Evidence of Insurance" documents, a claim file summary from American Modern, and excerpts of the deposition transcript of William Heeb, corporate representative of American Modern.
Nationstar argued that the Syphretts' claims under the DTPA fail because the Syphretts are not "consumers" with respect to Nationstar and Nationstar was merely a mortgagor under a reverse mortgage. Nationstar further argued that the fact that Nationstar acquired lender-placed insurance to protect its own interest in the property does not confer consumer status on the Syphretts, citing to Porter v. Countrywide Home Loans, Inc., No. V-07-75, 2008 U.S. Dist. LEXIS 56494, at *10 (S.D. Tex. July 24, 2008), Hansberger v. EMC Mortgage Corp., No. 04-08-00438-CV, 2009 Tex. App. LEXIS 5792, at **5-6 (Tex. App.—San Antonio July 29, 2009, pet. denied) (mem. op.), and Maginn v. Norwest Mortg., Inc., 919 S.W.2d 164, 166- 67 (Tex. App.—Austin 1996, no writ). Nationstar also argued that the Syphretts' Insurance Code claim does not create "consumer" status and Nationstar was entitled to summary judgment on the Syphretts' DTPA claim, as a matter of law.
According to Nationstar, the loan agreement authorized it to obtain lender-placed insurance and Nationstar made no misrepresentation to the Syphretts. Nationstar alleged that it informed the Syphretts when it obtained lender-placed insurance (when Bobby failed to acquire insurance), and the Syphretts' dissatisfaction with the coverage that was in place is not actionable under the DTPA. Nationstar also argued that the Syphretts' claim under the DTPA that was based on conduct occurring prior to June 29, 2014, would be barred by the Act's two-year limitations period.
As to the Syphretts' claim under the Texas Insurance Code, Nationstar argued that the statute requires a defendant to be engaged in the "business of insurance," and because Nationstar is not engaged in the business of insurance and the Syphretts' claim fails as a matter of law, citing to Bennett v. Bank United, 114 S.W.3d 75, 85 (Tex. App.—Austin 2003, no pet.). In addition, Nationstar argued that the Syphretts are not the named insured under the insurance policies covering the property and that Insurance Code claims are not available to third-party claimants, citing to Crown Life Insurance Co. v. Casteel, 22 S.W.3d 378, 384 n.1 (Tex. 2000) and Atlantic Lloyds Ins. Co. v. Butler, 137 S.W.3d 199, 220 (Tex. App.—Houston [1st Dist.] 2004, pet. denied). Nationstar attached a copy of the American Modern claim file summary, which names Generation as the insured party. In addition, Nationstar attached the deposition transcript of William Heeb, corporate representative for American Modern, which reflects that Heeb testified that Generation was the insured on the insurance policy. Nationstar further argued that any Insurance Code claims arising from conduct occurring before June 29, 2014 are also barred by limitations.
As to the Syphretts' claim for statutory real estate fraud, Nationstar argued that it was entitled to a judgment as a matter of law on the Syphretts' claims against it because Nationstar had no involvement in the origination of the loan and the Syphretts had no claim against Nationstar.
The real estate transaction at issue is the loan obtained by Plaintiffs in December 2009. The loan was originated by Generation Mortgage Company on December 4, 2009. Nationstar did not begin servicing the loan until May 2015. In other words, Nationstar did not have contact with Plaintiffs until May 2015. Thus, in 2009, it is not possible that a Nationstar representative made an affirmative misrepresentation or false promise on which Plaintiffs relied in deciding to obtain the subject loan, i.e., the real estate transaction at issue.Nationstar further argued that section 27.01 of the Business & Commerce Code does not apply to a loan transaction, citing to Plunkett, 27 S.W.3d at 611, and that the Syphretts' claim for statutory real estate fraud was barred by limitations because the property conveyance occurred on December 4, 2009. Regarding the Syphretts' claims for common law fraud and negligent misrepresentation in connection with the 2009 origination of the reverse mortgage loan, Nationstar alleged that the claims are barred by limitations. Additionally, Nationstar argued the economic loss rule bars the tort claims because the injuries claimed were related to the acquisition of lender-placed insurance, which would be governed by the loan agreement.
According to Nationstar, the Syphretts were not entitled to declaratory relief against Nationstar because the declarations they sought are derivative of their other claims in the lawsuit and "add nothing different to the other remedies sought in this action[]" and there is no basis for declaratory relief when a judicial declaration would add nothing to a judgment on the plaintiffs' other claims in the same lawsuit.
Nationstar also asserted there is no evidence the Syphretts are consumers under the DTPA; no evidence Nationstar committed a false, misleading, or deceptive act; no evidence that Nationstar is engaged in the business of insurance; no evidence Nationstar made any material representations to the Syphretts for the purpose of inducing them to enter into a real estate transaction; no evidence of any communication between Nationstar and the Syphretts prior to 2015; no evidence of a live controversy between Nationstar and the Syphretts to support the claim for declaratory judgment and no evidence that the loan is not in default; and no evidence that Janice's conveyance to Bobby was procured by fraud and without consideration.
Plaintiffs' Response to the Defendants' Motions for Summary Judgment
On July 16, 2018, the Syphretts filed a response to Generation's and Nationstar's traditional and no-evidence motions for summary judgment. Therein, the Syphretts argued that Generation and Nationstar (as Generation's "successor in interest") had tricked Janice, "a blind lady[,]" into conveying her interest in the family home. The Syphretts argued that Generation acted as an insurance agent and told the Syphretts it would sell them homeowner's insurance but that, after paying premiums, the Syphretts discovered they never received any insurance coverage. According to the Syphretts, their claims are not barred by limitations because of the discovery rule, and the Syphretts did not discover that Janice had no ownership interest in the home until 2016. The Syphretts further argued that the economic loss rule "does not shield tort liability from an independent tort such as fraud, violations of the Insurance Code, violations of DTPA, or negligent misrepresentation." The Syphretts also argue that they are consumers under the DTPA because they were seeking to purchase insurance and Generation told the Syphretts it was the insurance agent and represented that it sold them insurance to cover the Syphretts' losses but the insurance only covered Generation and Nationstar. The Syphretts denied that the loan was in default and argued that there was a live controversy about the amount due on the loan and a live controversy about the legal effect of the general warranty deed Janice signed.
In an affidavit attached to their response, Bobby stated that he had asked Generation whether the reverse mortgage transaction would affect his wife's ownership interest, that several representatives of Generation had told Bobby that Janice's interest would not be affected, and that Bobby would never have entered into the loan agreement if he had known that Generation would require Janice to convey her ownership interest in the home. According to Bobby, Elsa Garcia, a representative of Generation, told him and Janice that the general warranty deed that Janice signed was "merely a 'loan document[,]'" that Janice was blind and could not have seen the terms of the conveyance, and that Garcia did not explain that the instrument conveyed Janice's ownership interest in the home. Bobby stated that he and Janice discovered that Janice had conveyed her interest in the home "in 2016, when a documentary news program disclosed how reverse mortgage companies closed real estate transactions."
Bobby further stated in his affidavit that Generation had sold him homeowners' insurance for three policy years—April 1, 2013 through April 1, 2016—after representing to Bobby that the insurance could cover casualty losses to the home. Bobby stated that the home sustained storm damage on September 12, 2014 and April 19, 2015, but "[f]or some[] reason we could never get the insurance company to respond to the claims by paying for the losses[]" and in 2018, the Syphretts discovered they had no insurance but had paid premiums for coverage for Generation. Attached to Bobby's affidavit was a spreadsheet that Bobby characterized as showing the balance owed on his loan was $509,126.81.
Also attached to the Syphretts' response was Janice's affidavit. Therein Janice stated that Elsa Garcia, a representative of Generation, told the Syphretts that the general warranty deed Janice signed was "merely 'a loan document[,]'" and Janice would not have signed it if she had understood it conveyed the home to Bobby. Janice also stated that she discovered she had conveyed her home in 2016 when a documentary news program disclosed how reverse mortgages work.
Nationstar filed a Reply to Plaintiffs' Response on July 19, 2018, arguing that the summary judgment evidence showed that Janice was not an eligible borrower on the reverse mortgage, both Bobby and Janice signed an "Ownership Interest Certification (Non-Borrowing Spouse)[,]" Janice executed a general warranty deed conveying her interest in the property to Bobby, Bobby failed to pay property taxes and maintain insurance on the property as required by the loan agreement, Generation and Nationstar obtained lender-placed insurance to protect their interests in the property and after the property sustained damage, "claims were processed and paid[.]" Nationstar argued that the Syphretts "were told, on numerous occasions, that their failure to obtain insurance coverage (as required by the loan agreement) would result in Generation (and later Nationstar) obtaining lender-placed insurance to protect the property. Both Nationstar and Generation contend that the evidence does not support the Syphretts' claim that Generation or Nationstar made misrepresentations about insurance. Nationstar and Generation argued that "[b]ecause the actions related to obtaining lender-placed insurance were authorized under the loan agreement, they did not constitute false, misleading or deceptive practices or unconscionable actions[,]" citing to Craig v. Ameriquest Mortgage Co., No. H-04-3929, 2005 U.S. Dist. LEXIS 27503, at **13-14 (S.D. Tex. Nov. 4, 2005) (rejecting a DTPA claim related to a loan requirement that the borrower obtain standard property hazard insurance because the borrower was not a consumer under the DTPA) and Bennett, 114 S.W.3d at 83 (explaining that a loan agreement that requires a borrower to obtain insurance is not a deceptive practice). According to Nationstar, the Syphretts failed to identify any provision in any agreement between Nationstar and the Syphretts that creates an express warranty related to insurance.
Plaintiffs' Motion for Partial Summary Judgment
On June 11, 2018, the Syphretts also filed a cross-motion for partial summary judgment against the Defendants, with attached affidavits from Bobby, Janice, and their attorney, along with deposition excerpts by William Heeb (a representative of American Modern) and William Fowler (an attorney). Therein, the Syphretts alleged that Elsa Garcia told the Syphretts that the general warranty deed that Janice signed was "merely 'a loan document[,]'" and that due to vision disease, Janice was unable to see the instrument. The Syphretts further alleged that representatives of Generation had previously told Bobby that, under the reverse mortgage loan arrangement, he and Janice would be able to live in and use their home until they both died, and that Janice would not have signed the general warranty deed if she had understood that it conveyed the home to Bobby. The Syphretts alleged that they discovered "Janice Syphrett's loss of her Home in 2016 when a documentary news program disclosed how reverse mortgage companies closed real estate transactions."
The Syphretts also alleged that Generation told Bobby that it would charge him premiums for him to purchase homeowners' insurance and that Bobby paid premiums for two policy years. According to the Syphretts' motion, they sustained storm damage to their home on September 12, 2014 and April 19, 2015, and after Bobby submitted claims, "for some[] reason the Syphretts could never get the insurance company to respond to the claims by paying for the losses."
The Syphretts alleged that Generation and Nationstar, as successor in interest to Generation, committed common law fraud by misrepresenting that the General Warranty Deed was merely a loan document and by selling insurance to the Syphretts that did not cover the Syphretts' casualty losses. The Syphretts requested partial summary judgment against Generation and Nationstar on their claim for common law fraud.
In addition, on August 13, 2018, the Syphretts filed a bench brief addressing Generation's and Nationstar's liability under the Texas Insurance Code and DTPA. Thereafter, on August 14, 2018, Generation filed a response to the Syphretts' bench brief and moved to strike the brief to the extent it sought to supplement the summary judgment record.
Objections to Summary Judgment Evidence
Generation's Objections to Evidence
Generation filed an Objection to the Admissibility, and Motion to Exclude the Testimony, of Daniel Barnes on July 13, 2018. Therein, Generation argued that Barnes's testimony should be excluded because he is not qualified to offer the proposed opinions on the Syphretts' losses, because his opinions are not relevant and would not aid the trier of fact, and because his opinions and the underlying facts and assumptions are unreliable. Generation represented that the Syphretts had identified Barnes as a project manager for a construction company who had prepared a report of damage to the Syphretts' house, however, Generation argued that Barnes had not examined the roof, plumbing vents, pipes, or seals for water damage and his opinion on the need for mold remediation was admittedly speculative. Generation argued that Barnes's proposed testimony was irrelevant because the property was covered under Generation's master insurance policy and there is no evidence that the insurance coverage would have been any different if the beneficiary under the insurance policy was different.
In a later-filed motion responding to a bench brief filed by the Syphretts, Generation alleged that on August 7, 2018, the trial court held a hearing on Generation's motions to exclude the testimony of William Fowler, William O'Sullivan, and Daniel Barnes. The appellate record does not include a reporter's record of that hearing.
Also on July 13, 2018, Generation filed an Objection to the Admissibility, and Motion to Exclude the Testimony, of William Fowler. Generation argued that the proposed opinions of attorney William Fowler are inadmissible because he is not qualified, the proposed opinions are not relevant and would not aid the trier of fact, and because Fowler's opinions rely on unreliable facts, assumptions, and legal authorities. Generation also argues that Fowler's testimony should be excluded because an expert may not usurp the court's role by offering legal conclusions. According to Generation, the Syphretts identified Fowler as an expert in real estate law who would testify "that Janice [] has no rights to the subject home in the event of [Bobby's] death and that Defendants should have disclosed that material fact to Janice [] before she signed the deed." Generation argued that Fowler actually testified in his deposition that he was not sure whether Janice would lose rights to the property if Bobby predeceased her and he was not aware of recent changes in HUD requirements for reverse mortgages, and Generation argued that "the Syphretts[] intend to use Fowler to merely advocate their legal position from the witness stand."
In addition, on July 13, 2018, Generation filed its Objection to the Admissibility, and Motion to Exclude the Testimony, of William O'Sullivan. The Syphretts had identified O'Sullivan as a risk management expert who would testify "that the mortgage company misrepresented the insurance to the Syphretts and that the mortgage company handled the insurance claim in bad faith." Generation objected to the admission of O'Sullivan's proposed expert testimony because he was not qualified, his opinions were not relevant and were based on unreliable law and facts, and his opinions would not be helpful to the fact-finder. Generation argued that O'Sullivan admitted in his deposition that he is not familiar with Texas law on bad-faith insurance claims and he has almost no experience with lender-placed insurance. Generation also argued that an opinion by O'Sullivan about whether Generation made a misrepresentation would "usurp the trier of fact's role[.]"
Then on July 16, 2018, Generation filed Objections to Plaintiffs' Summary Judgment Evidence. Therein, Generation argued that Janice's and Bobby's affidavits include hearsay statements and are "sham affidavits" because they contradict Janice's and Bobby's deposition testimony. Generation also argued that Janice's and Bobby's affidavits were irrelevant because they are mere attempts to disclaim responsibility for Janice having signed the general warranty deed but that, as a matter of law, a party is presumed to know and accept the terms of an instrument the party signs. In addition, Generation argued that Janice's and Bobby's affidavits include "self-serving, conclusory statements" of interested witnesses that were not competent summary judgment evidence.
Nationstar's Objections to Evidence
On July 20, 2018, Nationstar filed Objections to and Motion to Strike Plaintiffs' Summary Judgment Evidence. Nationstar argued that Bobby's affidavit contains inadmissible hearsay and conclusory statements and relies upon an unauthenticated exhibit. Nationstar also argues that Bobby's affidavit is a sham because it contradicts his prior deposition testimony. Nationstar also argues that Janice's affidavit contains inadmissible hearsay and conclusory statements, and that it, too, is a sham because it contradicts her deposition testimony.
Plaintiffs' Objections to Evidence
The Syphretts filed Objections to Defendants' Summary Judgment Evidence on July 16, 2018. The Syphretts argued that numerous exhibits relied on by both Generation and Nationstar were inadmissible hearsay, that the affidavits of Diane Coats and Jeffrey Jefferson were speculative and not based on personal knowledge, and that neither Coats nor Jefferson were custodians of record.
The Syphretts also filed a response to Generation's and Nationstar's objections to their summary judgment evidence on July 23, 2018, denying that Janice's and Bobby's affidavits were shams or conclusory and denying that statements by Elsa Garcia were hearsay.
Trial Court's Orders and Notices of Appeal
On July 16, 2018, the Plaintiffs filed a partial nonsuit as to their claims under sections 17.46(b)(4), (11), (13), (21), and (23) of the DTPA, which the trial court granted.
On August 17, 2018, the trial court entered an order granting Nationstar's traditional and no-evidence motions for summary judgment "in each's entirety[]" and ordered that the Syphretts take nothing on their claims against Nationstar. Also on August 17, 2018, the trial court entered an order partially granting Generation's traditional and no-evidence motions for summary judgment as to the Syphretts' claims under the DTPA and the Insurance Code.
The same day, the court denied Generation's motion to exclude the testimony of William Fowler and stated that "William Fowler's testimony will be limited to the opinions/testimony stipulated to on the record by Plaintiffs' counsel during the hearing (i.e., what will happen to Janice [Syphrett's] rights in the home if Bob Syphrett predeceases her)." In the same order, the trial court denied Generation's motion as to the testimony of Daniel Barnes and explained that "Daniel [Barnes's] testimony will be limited to the opinions/testimony stipulated to on the record by Plaintiffs' counsel during the hearing (i.e., that the reasonable and necessary costs of repairs for the home are $150,000 and he will not testify as to causation." In the order the trial court found that the motion to exclude the testimony of William O'Sullivan was moot based on the causes of action disposed of by summary judgment and denied all other relief requested.
In addition, on August 17, 2018, the trial court entered an order granting "Nationstar's traditional motion for summary judgment and [] no-evidence motion for summary judgment [] in each's entirety[]" and ordered that the Syphretts take nothing on their claims for relief against Nationstar.
On November 28, 2018, the Syphretts and Generation filed a Stipulation Regarding Declaratory Judgment Cause of Action that stated that the Syphretts' cause of action for declaratory judgment was only against Nationstar.
On December 5, 2018, the trial court entered an Order Granting Generation Mortgage Company's Motion for Summary Judgment After Reconsideration, finding:
. . . this Court finds that GENERATION MORTGAGE COMPANY'S Motion for Summary Judgment should be GRANTED and is hereby GRANTED on Plaintiffs['] claims of Statutory Fraud, Common Law Fraud and Negligent Misrepresentation. The Court further finds that GENERATION MORTGAGE COMPANY'S Motion for Summary Judgment was previously granted as to the Plaintiffs' DTPA claims and Insurance Code Claims.
The Syphretts filed a notice of appeal on December 7, 2018, appealing three orders: the August 17, 2018 order partially granting Generation's motion for summary judgment, the August 17, 2018 order granting Nationstar's traditional and no-evidence motion for summary judgment, and the December 5, 2018 order granting Generation's motion for summary judgment after reconsideration. Later, on January 8, 2019, the trial court entered an Order Granting Motion for Entry of Final Judgment, dismissing all the Syphretts' claims against Elsa Garcia with prejudice.
On January 23, 2019, Generation filed a motion requesting a ruling on its objections to the Syphretts' summary judgment evidence "to preserve its objections on appeal." On January 30, 2019, the trial court entered two orders ruling on Nationstar's and Generation's objections to the Syphretts' summary judgment evidence. The orders sustained some objections and overruled others.
On March 22, 2019, the trial court entered an Order Modifying Order Granting Generation Mortgage Company's Motion for Summary Judgment After Reconsideration awarding Generation all taxable costs against the Syphretts. On April 9, 2019, the trial court entered an Order Denying Plaintiffs' Motion for De Novo Hearing and to Vacate Two Orders.
Also on March 22, 2019, the trial court entered an order ruling on the Syphretts' objections to Generation's and Nationstar's summary judgment evidence. In this order, the court overruled all the Syphretts' objections except that it sustained the objection to "Defendants' evidence in 'no-evidence' motions[.]" The Syphretts do not appeal this order.
The Syphretts filed an Amended Notice of Appeal on January 14, 2019 and a Second Amended Notice of Appeal on February 4, 2019. And the Syphretts filed a Third Amended Notice of Appeal, appealing the following:
a. Order Partially Granting Generation Mortgage Company's Motion for Summary Judgment, signed August 17, 2018;
b. Order Granting Nationstar's Traditional and No-Evidence Motion for Summary Judgment, signed August 17, 2018; []
c. Order Granting Generation Mortgage Company's Motion for Summary Judgment After Reconsideration, signed December 5, 2018.
d. Order Granting Motion for Entry of Final Judgment, signed January 8, 2019.
e. Order on Nationstar Mortgage, L.L.C.'s Objections to and Motion to Strike Plaintiffs' Summary Judgment Evidence, signed on January 30, 2019.
f. Order on Generation Mortgage Company, L.L.C.'s Objections to Plaintiffs' Summary Judgment Response and Evidence, signed on January 30, 2019.
g. Order Modifying Order Granting Generation Mortgage Company's Motion for Summary Judgment After Reconsideration, signed on March 22, 2019.
h. Order Denying Plaintiffs' Motion for De Novo hearing and to Vacate Two Orders, signed on April 9, 2019.
Issues
Appellants raise the following six issues on appeal:
Issue One. The trial court erred in granting a summary judgment on Appellants' declaratory judgment claims.
Issue Two. The trial court erred in granting a summary judgment on the Syphretts' common [law] fraud claim with respect to Nationstar's and Generation's sale of insurance policies to them.
Issue Three. The trial court erred in granting summary judgment on the Syphretts' negligent misrepresentation claim with respect to Nationstar's and Generation's sale of insurance policies to them.
Issue Four. The trial court erred in granting summary judgment on the Syphretts' DTPA claim with respect to Nationstar's and Generation's sale of insurance policies to them.
Issue Five. The trial court erred in ruling on the mortgage companies' evidentiary objections after the final judgment because those rulings were moot and advisory opinions.
Issue Six. The trial court erred in its post-judgment evidentiary rulings by sustaining hearsay objections that were admissions outside of the definition of hearsay.
Standard of Review
We review grants of summary judgment de novo. Cantey Hanger, LLP v. Byrd, 467 S.W.3d 477, 481 (Tex. 2015). We take as true all evidence favorable to the non-movant, indulge every reasonable inference in favor of the non-movant, and resolve any doubts in the non-movant's favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
When a party moves for both traditional and no-evidence summary judgments, we first consider the no-evidence motion. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). If the non-movant fails to meet its burden under the no-evidence motion, there is no need to address the challenge to the traditional motion because it necessarily fails. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013).
To defeat a no-evidence motion for summary judgment, the non-movant must produce more than a scintilla of evidence raising a genuine issue of material fact as to the challenged elements. See Ridgway, 135 S.W.3d at 600. A genuine issue of material fact exists if the evidence "'rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.'" Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997) (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)). The evidence does not create an issue of material fact if it is "'so weak as to do no more than create a mere surmise or suspicion'" that the fact exists. First United Pentecostal Church of Beaumont v. Parker, 514 S.W.3d 214, 220 (Tex. 2017) (quoting Kia Motors Corp. v. Ruiz, 432 S.W.3d 865, 875 (Tex. 2014)).
A party moving for traditional summary judgment meets its burden by proving that there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c).
Objections to Evidence
In consideration of the other issues, we first address Appellants' last two issues, which challenge the trial court's orders on objections to certain summary judgment evidence. According to Appellants, the trial court's rulings on the objections to evidence were moot and advisory opinions because they were rendered after the trial court had entered a final judgment disposing of all claims in the case. Appellants also argue that statements by agents or employees of Generation or Nationstar are not hearsay.
The trial court signed orders granting summary judgment in favor of Generation and Nationstar on August 17, 2018, and December 5, 2018. Appellants filed a notice of appeal with the trial court on December 5, 2018, and the notice of appeal was received by this Court on December 7, 2018. After the case was already on appeal, on January 30, 2019, the trial court entered its orders on Generation's and Nationstar's objections to Plaintiffs' summary judgment evidence. And then almost three months later, on March 22, 2019, the trial court entered an order on Plaintiffs' objections to Defendants' summary judgment evidence. The Appellants filed amended notices of appeal on January 16, 2019, February 5, 2019, and April 22, 2019.
A trial court retains plenary power over its judgment until that judgment becomes final for appellate purposes. Offshore Express, Inc. v. Klein Investigations & Consulting, No. 09-17-00333-CV, 2018 Tex. App. LEXIS 10272, at *13 (Tex. App.—Beaumont Dec. 13, 2018, no pet.) (mem. op.) (citing Tex. R. Civ. P. 329b; Lehmann v. Har-Con Corp., 39 S.W.3d 191, 200 (Tex. 2001); Fruehauf Corp. v. Carrillo, 848 S.W.2d 83, 84 (Tex. 1993) (per curiam)). A judgment is final for purposes of appeal if it disposes of all claims and parties then before the trial court. Lehmann, 39 S.W.3d at 195, 200, 205. In addition, a court of appeals acquires appellate jurisdiction over all parties to the judgment or order challenged once any party perfects an appeal by filing a notice of appeal. Tex. R. App. P. 25.1(b). Subject-matter jurisdiction is fundamental, and we must review sua sponte issues affecting the trial court's subject matter jurisdiction. See M.O. Dental Lab v. Rape, 139 S.W.3d 671, 673 (Tex. 2004); Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993) (appellate court's subject matter jurisdiction may be raised by the court sua sponte).
Judicial action taken by the trial court after the trial court's plenary power has expired is void. See In re Dickason, 987 S.W.2d 570, 571 (Tex. 1998) (orig. proceeding); State ex rel. Latty v. Owens, 907 S.W.2d 484, 486 (Tex. 1995); Malone v. Hampton, 182 S.W.3d 465, 468 (Tex. App.—Dallas 2006, no pet.) ("Judicial action taken after the expiration of the court's jurisdiction is a nullity, and any orders signed outside the court's plenary jurisdiction are void."); see also Mapco, Inc. v. Forrest, 795 S.W.2d 700, 703 (Tex. 1990) (defining a void judgment as one rendered when a court has no jurisdiction over parties or subject matter, no jurisdiction to render judgment, or no capacity to act as a court). However, a trial court retains plenary power to grant a new trial or vacate, modify, correct, or reform the judgment within thirty days after the judgment is signed, even if an appeal has been perfected. See Tex. R. Civ. P. 329b(d). The rulings Appellants challenge in this appeal did not grant a new trial nor vacate, modify, correct, or reform the judgment, but were merely evidentiary rulings.
We conclude that the trial court lost plenary power over cause number 16-06-07514 after Appellants appealed the summary judgment and the orders ruling on the objections to the summary judgment evidence are void for lack of jurisdiction. See Offshore Express, Inc., 2018 Tex. App. LEXIS 10272, at *16. Because we lack jurisdiction to consider the merits of an appeal from a void ruling, we dismiss Appellants' fifth and six issues. See id. (citing Ins. Co. of Pa. v. Martinez, 18 S.W.3d 844, 847 (Tex. App.—El Paso 2000, no pet.)).
Appellants' amended notice of appeal states that they appealed the trial court's April 9, 2019 Order Denying Plaintiffs' Motion for De Novo Hearing and to Vacate Two Orders. However, Appellants' brief does not address the April 9th order. To the extent Appellants raise a challenge to this order in their brief, we note that the trial court entered this order after Appellants filed their initial notice of appeal on December 5, 2020, and we dismiss any issue related to this order for lack of jurisdiction for the same reasons as explained above.
In light of our ruling, the contested summary judgment evidence that was before the trial court at the time the summary judgment motions were ruled upon remains part of the summary judgment evidence because the trial court's rulings on the objections to the summary judgment evidence are void. See Aust v. Conroe Indep. Sch. Dist., 153 S.W.3d 222, 227 (Tex. App.—Beaumont 2004, no pet.) (citing Wright v. Greenberg, 2 S.W.3d 666, 676 (Tex. App.—Houston [14th Dist.] 1999, pet. denied); see also U.S. Bank Nat'l Ass'n v. Stanley, 297 S.W.3d 815, 821 n.8 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (concluding that hearsay objections were not preserved for review where no ruling was obtained prior to the trial court's judgment).
Claim for Declaratory Judgment
We now consider Appellants' first issue wherein the Appellants contend that the trial court erred in granting summary judgment on their claims for declaratory judgment. The Appellants argue that "[t]he trial court simply never adjudicated Bob's and Janice's declaratory judgment cause of action and merely ignored it altogether."
In their amended petition, Appellants sought a declaration that:
A. The Syphrett loan with Defendants is not and has not been in default.
B. The payoff for the mortgage loan as of February 29, 2016, was no more than $506,534.59, not the $581,183.04, which Defendants have contended.
C. Janice Syphrett's alleged conveyance in 2009 is null, void, and of no effect, because Defendants procured that conveyance by fraud and without consideration.
Appellee Generation argues on appeal that the Syphretts were not entitled to maintain a request for declaratory relief because there was no existing controversy between them regarding the declarations requested. Generation contends that the requested declarations regarding default and the payoff value of the loan do not relate to an existing controversy between Generation and the Syphretts because Generation had no interest in the loan or the property as of May 2015. In addition, the record evidence includes a stipulation by the Syphretts that their claim for declaratory relief is only against Nationstar. A party's stipulation is a judicial admission that is conclusive upon the party making the stipulation and operates as a formal waiver of proof. See Mendoza v. Fid. and Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex. 1980) (citing Gevinson v. Manhattan Constr. Co. of Okla., 449 S.W.2d 458, 467 (Tex. 1969); McCormick and Ray, Texas Law of Evidence § 1127 (2d ed. 1956)). Because the Syphretts waived their claim for declaratory relief against Generation by stipulation filed in the trial court, the claim was no longer valid as to Generation. We overrule issue one as to the Syphretts' claim against Generation.
With respect to the declaratory judgment claim against Nationstar, Nationstar argues that any fraud claim relating to Janice's 2009 conveyance is invalid as a matter of law because Nationstar did not begin servicing the loan until May 2015, and Nationstar did not have contact with the Syphretts until May 2015. Nationstar also argues that a claim for fraud based on any actions in 2009 would be barred by the applicable statute of limitations. Nationstar also contends that the Plaintiffs' claim for declaratory judgment fails because the Plaintiffs sought "declarations that add nothing different to the other remedies sought in this action[]" and because declaratory relief is not available to settle disputes already pending before a court.
An action for declaratory judgment lies
. . . when the fact situation manifests the presence of "ripening seeds of a controversy." Such appear where the claims of several parties are present and indicative of threatened litigation in the immediate future which seems unavoidable, even though the differences between such parties as to their legal rights have not reached the state of an actual controversy.Ainsworth v. Oil City Brass Works, 271 S.W.2d 754, 761 (Tex. App.—Beaumont 1954, no writ). A declaratory judgment is appropriate if a justiciable controversy exists that concerns the rights and status of the parties and is resolvable by the declaration sought, and there must be "'a real and substantial controversy involving a genuine conflict of tangible interests and not merely a theoretical dispute.'" EWB-I, LLC v. PlazAmericas Mall Tex., LLC, 527 S.W.3d 447, 471 (Tex. App.—Houston [1st Dist.] 2017, pet. denied) (quoting Tanglewood Homes Ass'n, Inc. v. Feldman, 436 S.W.3d 48, 65 (Tex. App.—Houston [14th Dist.] 2014, pet. denied)). A claim is not ripe when, considering the facts at the time the lawsuit is filed, the plaintiff's claim is not concrete but rather depends on contingent or hypothetical facts or events that have not yet come to pass. See Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851-52 (Tex. 2000). "Seeking a declaration of rights under the Uniform Declaratory Judgments Act is not sufficient to avoid the ripeness doctrine." Texas A & M Univ. v. Hole, 194 S.W.3d 591, 593 (Tex. App.—Waco 2006, pet. denied). A court lacks subject-matter jurisdiction over claims that are not ripe. See id. (citing Patterson v. Planned Parenthood of Hous. and Se. Tex., Inc., 971 S.W.2d 439, 442 (Tex. 1998)).
We disagree with the Syphretts' argument that the trial court "simply never adjudicated Bob's and Janice's declaratory judgment cause of action and merely ignored it altogether." Nationstar's motion for summary judgment argued that it did not begin servicing the loan until 2015 and that it had no contacts with the Syphretts during the loan origination. Nationstar also argued that the Syphretts were not entitled to declaratory relief against Nationstar because the declarations sought would add nothing different to the other remedies sought in this action. The trial court's August 17, 2018 order "ordered, adjudged and decreed that Nationstar's traditional motion for summary judgment and [] no-evidence motion for summary judgment is each granted in each's entirety." The order also stated, "It is further ordered, adjudged and decreed that the Syphretts take nothing on each and every one of their claims for relief asserted against Nationstar in this suit." See In re Vaishangi, Inc., 442 S.W.3d 256, 260 (Tex. 2014) (per curiam) (orig. proceeding) (explaining that, to be a final judgment, an order must include decretal language, that is, "ordered, adjudged, and decreed"); Bison Bldg. Materials, Ltd. v. Aldridge, 442 S.W.3d 582, 585 (Tex. 2012) (a judgment is final if it disposes of all claims and parties or "'states with unmistakable clarity that it is a final judgment[]'") (quoting Lehmann, 39 S.W.3d at 192-93). We conclude that the trial court's order granting Nationstar's Motion for Summary Judgment adjudicated all claims asserted against Nationstar, including but not limited to the declaratory judgment claim. See Vaishangi, 442 S.W.3d at 260; Aldridge, 442 S.W.3d at 585.
Loan Status
Ordinarily, borrowers are generally not obligated to repay the principal or interest on a reverse mortgage during their lifetimes. See Washington-Jarmon v. OneWest Bank, FSB, 513 S.W.3d 103, 105 (Tex. App.—Houston [14th Dist.] 2016, no pet.); Larsen v. OneWest Bank, FSB, No. 14-14-00485-CV, 2015 Tex. App. LEXIS 11474, at *11-12 (Tex. App.—Houston [14th Dist.] Nov. 5, 2015, no pet.) (mem. op.). There was no evidence in the record that indicated either Defendant had demanded payment on the reverse mortgage, nor was there any indication that the lenders had declared the Syphretts to be in default under the reverse mortgage agreements. Nationstar argued in its motion that there was no evidence that the loan was in default and no evidence that the payoff for the loan as of February 29, 2016 was no more than what Plaintiffs had alleged was $506,534.59. We also note that the record includes no evidence that Nationstar (or Generation) had sought to foreclose on the property.
Consequently, we conclude that there was no live controversy between Nationstar and the Syphretts about whether the note was in default or regarding the amount of the payoff value of the loan, and any such dispute was premature, contingent, or hypothetical. See Gibson, 22 S.W.3d at 851-52. The requested relief regarding the amount due on the reverse mortgage or the status of the loan was not ripe, and the trial court did not err in granting summary judgment to Nationstar on the alleged declaratory judgment because the claim was not ripe for adjudication. See Patterson, 971 S.W.2d at 442. We overrule the portion of Appellants' first issue that pertains to the declaratory judgment claim asking whether the loan was in default and asking the trial court to declare the payoff amount of the loan.
Janice's 2009 Conveyance
In their affidavits, Bobby and Janice both asserted that they did not discover that Janice had conveyed her interest in the property to Bobby by executing a General Warranty Deed in 2009 until they watched a "documentary news program" about reverse mortgages in 2016. Generation and Nationstar both argued to the trial court that the Syphretts' claim to declare Janice's 2009 conveyance to Bobby void was barred by the statute of limitations.
The statute of limitations for a cause of action for fraud is four years and accrues on the date the defendant makes the false representation. See Tex. Civ. Prac. & Rem. Code Ann. § 16.004(a)(4); Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex. 1988). "The discovery rule delays accrual until the plaintiff 'knew or in the exercise of reasonable diligence should have known of the wrongful act and resulting injury.'" Schlumberger Tech. Corp. v. Pasko, 544 S.W.3d 830, 834 (Tex. 2018) (quoting S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996)). The discovery rule is "'a very limited exception to statutes of limitations[,]'" and is available only "when the nature of the plaintiff's injury is both inherently undiscoverable and objectively verifiable." Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734 (Tex. 2001) (quoting and citing Computer Assocs. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455-56 (Tex. 1996)); see also Barker v. Eckman, 213 S.W.3d 306, 312 (Tex. 2006); Treuil v. Treuil, 311 S.W.3d 114, 119 (Tex. App.—Beaumont 2010, no pet.). When the defendant moves for summary judgment on the basis of an affirmative defense, such as limitations, it has the burden to prove conclusively all the elements of the affirmative defense as a matter of law. See KPMG Peat Marwick v. Harrison Cty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999); Velsicol Chem. Corp. v. Winograd, 956 S.W.2d 529, 530 (Tex. 1997). Generally, questions surrounding when a party's cause of action accrues for the purpose of limitations are decided as a matter of law. See Webb v. Crawley, 590 S.W.3d 570, 583 (Tex. App.—Beaumont 2019, no pet.) (citing Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 202 (Tex. 2011)). "'[W]hen there is actual or constructive notice, or when information is "readily accessible and publicly available," then, as a matter of law, the accrual of a fraud claim is not delayed.'" Cosgrove v. Cade, 468 S.W.3d 32, 38-39 (Tex. 2015) (quoting Hooks v. Samson Lone Star, Ltd. P'ship, 457 S.W.3d 52, 59 (Tex. 2015)).
The summary judgment evidence includes a copy of the General Warranty Deed executed by Janice Syphrett on December 4, 2009, which includes a stamp indicating it had been recorded in the Official Public Records of Real Property in Montgomery County, Texas on January 6, 2010. The evidence also includes a document titled "Ownership Interest Certification" signed by both Janice as a non-borrowing spouse and Bobby as a borrowing spouse on December 4, 2009. A checkmark appears next to the following section of the Ownership Interest Certification:
If you have an ownership interest in the above reference[d] property but will NOT be a borrower under the proposed reverse mortgage, you need to be aware of the following:Also included in the summary judgment evidence is a U.S. Department of Housing and Urban Development form titled "Certificate of HECM Counseling" signed on October 17, 2009, by Bobby and also by a counselor. In this form, the counselor certified that he had discussed with Bobby, in relevant part, that
The Lender does not recommend or require any changes to the ownership of real property as a condition to making a reverse mortgage loan. However, the reverse mortgage program has certain restrictions that prevent some property owners from being eligible borrowers. These restrictions also prohibit an individual from holding an ownership interest in the property, if they are not an eligible borrower.
As a result of these restrictions, any non-eligible owners will be required to relinquish their ownership interest in the property. By relinquishing your ownership interest, you are affecting your legal rights. Generation Mortgage Company strongly suggests that you consult with your financial and/or legal advisor(s) to determine if this reverse mortgage loan is in your best interest.
If you continue to reside in the property after divestiture and the borrower predeceases you or no longer occupies the property as their primary residence, the reverse mortgage will become due and payable. Typically, the borrower's estate must pay off the reverse mortgage through the proceeds of the sale of the property or through a refinance into a new mortgage.
The Home Equity Conversion Mortgage will be due and payable when no remaining borrower lives in the mortgaged property, or when any other covenants of the mortgage have been violated. (Borrowers are those parties who have signed the Note and Mortgage or Deed of Trust.)The Homeowner Certification, signed by Bobby, stated in relevant part that:
I/we hereby certify that I/we have discussed the financial implications of and alternatives to a HECM with the above Counselor. I/we understand the advantages and disadvantages of a HECM and each type of payment plan, as well as the costs of a HECM and when the HECM will become due and payable.
Once Nationstar asserted that the fraudulent inducement claim was barred by the applicable statute of limitations and further that there was no evidence that Nationstar committed any fraud given the fact Nationstar did not even hold or service the reverse mortgage at the time in question, the Syphretts had the burden to come forward with evidence to support their claim that the fraud claim was inherently undiscoverable and also to support the elements of their claim of fraud against Nationstar. See Parker, 514 S.W.3d at 220; Ridgway, 135 S.W.3d at 600. Based on the record before us, we conclude that the trial court did not err in granting the summary judgment on the fraud claim because there is no evidence that the nature of the claimed injury was inherently undiscoverable or that it was not objectively verifiable. See Barker, 213 S.W.3d at 312; Horwood, 58 S.W.3d at 734. The nature of the conveyance was stated in the plain terms of the General Warranty Deed. The "Ownership Interest Certification" signed by both Janice and Bobby on December 4, 2009, stated that "non-eligible owners will be required to relinquish their ownership interest in the property[]" and that the note would become due and payable upon the death of the borrower. The record does not show that the claimed injury was "unlikely to be discovered within the legislatively proscribed limitations period even when the claimant has exercised due diligence." See Treuil, 311 S.W.3d at 119 (citing Horwood, 58 S.W.3d at 734-35). Therefore, the trial court would not have erred in concluding that the Syphretts' claim for declaratory judgment voiding the 2009 conveyance was barred by the statute of limitations as a matter of law. See Webb, 590 S.W.3d at 583.
The Syphretts also sought a declaratory judgment voiding the 2009 conveyance because they claimed it was procured "without consideration." The terms of the General Warranty Deed state that it was executed "in consideration of the sum of TEN DOLLARS ($10.00) cash, and other good and valuable consideration[.]" And the settlement statement on the reverse mortgage reflects that money was paid to the lienholder and that Bobby was also paid $122,467.65 at closing. When an agreement is in writing, consideration is presumed and the party alleging lack of consideration has the burden to rebut that presumption. Blockbuster, Inc. v. C-Span Entm't, Inc., 276 S.W.3d 482, 488 (Tex. App.—Dallas 2008, pet. granted). The Syphretts' claim for declaratory relief lies solely against Nationstar, and there is no evidence that Nationstar had any contact or communication with the Syphretts in 2009 when Janice signed the General Warranty Deed. On this record, the Syphretts failed to rebut the presumption of consideration and offered no summary judgment evidence that Nationstar was involved in the 2009 conveyance, and the trial court would not have erred in concluding that there was no evidence that Janice's 2009 conveyance was procured without consideration or by fraud by Nationstar. We overrule the Appellants' first issue.
The settlement statement also reflects that, under the reverse mortgage, $182,298.00 was paid to S & E Operations, Inc. and $17,376.22 was paid to the Montgomery County Tax Office.
Insurance Claims
The remainder of Appellants' issues argue that the trial court erred in granting summary judgment in favor of Generation and Nationstar as to the Syphretts' claims for common law fraud, negligent misrepresentation, and the DTPA with respect to Nationstar's and Generation's sale of insurance policies to the Syphretts.
DTPA Claim
The Plaintiffs' amended petition asserts a claim under the DTPA alleging that the Defendants misrepresented the nature of the insurance and "continuing failure to pay the Syphretts' claims[.]" To prevail on a DTPA claim, DTPA plaintiffs are required to show (1) that they were consumers with respect to the purchase at issue, (2) that the defendant engaged in false, misleading, or deceptive acts, and (3) that the defendant's acts were a producing cause of the plaintiffs' damages. See Sun Dev., L.P. v. Hughes, No. 09-12-00524-CV, 2014 Tex. App. LEXIS 10762, at *18 (Tex. App.—Beaumont Sept. 25, 2014, pet. denied) (citing Tex. Bus. & Com. Code Ann. § 17.50(a); Doe v. Boys Clubs of Greater Dallas, Inc., 907 S.W.2d 472, 478 (Tex. 1995); Main Place Custom Homes, Inc. v. Honaker, 192 S.W.3d 604, 623 (Tex. App.—Fort Worth 2006, pet. denied)). Consumer status is a question of law. Ortiz v. Collins, 203 S.W.3d 414, 424 (Tex. App.—Houston [14th Dist.] 2006, no pet.); Kenneth H. Hughes Interests, Inc. v. Westrup, 879 S.W.2d 229, 234 (Tex. App.—Houston [1st Dist.] 1994, writ denied) (noting that whether a plaintiff's status as a "consumer" under the DTPA is a question of law). Consumer status depends on the transaction, not the contractual relationship between the parties. Sparks v. Booth, 232 S.W.3d 853, 864 (Tex. App.—Dallas 2007, no pet.) (citations omitted). Because a plaintiff's consumer status under the DTPA is a question of law, we conduct our review de novo. See AdvoCare Int'l, L.P. v. Ford, No. 05-10-00590-CV, 2013 Tex. App. LEXIS 1162, at *7 (Tex. App.—Dallas Feb. 5, 2013, pet. denied) (mem. op.); Business Staffing, Inc. v. Viesca, 394 S.W.3d 733, 742 (Tex. App.—San Antonio 2012, no pet.); Bohls v. Oakes, 75 S.W.3d 473, 479 (Tex. App.—San Antonio 2002, pet. denied).
"Generally, a person cannot qualify as a consumer if the underlying transaction is a pure loan because money is considered neither a good [n]or a service." Fix v. Flagstar Bank, FSB, 242 S.W.3d 147, 159 (Tex. App.—Fort Worth 2007, pet. denied) (citing Riverside Nat'l Bank v. Lewis, 603 S.W.2d 169, 173-74 (Tex. 1980)). The Texas Supreme Court has explained that borrowers can qualify as consumers if they borrow money for the purpose of buying a good or service and their complaint concerns the good or service they purchased. See Flenniken v. Longview Bank & Tr. Co., 661 S.W.2d 705, 707 (Tex. 1983); see also Ebrahimi v. Caliber Home Loans, Inc., No. 05-18-00456-CV, 2019 Tex. App. LEXIS 3033, at **22-23 (Tex. App.—Dallas Apr. 15, 2019, pet. denied) (mem. op).
"'A mortgagor qualifies as a consumer under the DTPA if his or her primary objective in obtaining the loan was to acquire a good or service, and that good or service forms the basis of the complaint.'" Ebrahimi, 2019 Tex. App. LEXIS 3033, at *23 (quoting Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 725 (5th Cir. 2013)); see also Riverside Nat'l Bank, 603 S.W.2d at 174-75 (A person who seeks only credit or to borrow money is not a consumer under the DTPA because money is not a good or a service.); Hansberger, 2009 Tex. App. LEXIS 5792, at **5-6; Allen v. Am. Gen. Fin., Inc., 251 S.W.3d 676, 694 (Tex. App.—San Antonio 2007, pet. granted) ("A borrower whose sole objective is a loan does not become a consumer merely because the lender provides services incidental to the loan that are not independent objectives of the transaction."). But a mortgagor challenging how an existing mortgage is serviced is not a consumer under the DTPA because the basis of the claim is the subsequent loan servicing activities and not any goods or services acquired in the original transaction. See Ebrahimi, 2019 Tex. App. LEXIS 3033, at *23 (citing Rojas v. Wells Fargo Bank, N.A., 571 F. App'x 274, 279 (5th Cir. 2014)).
It is undisputed that the Syphretts acquired the property in 2006 from S & E Operations, Inc., financed by a loan. The summary judgment evidence shows that in 2009, Bobby Syphrett refinanced the property by entering into a reverse mortgage loan agreement with Generation. There is no evidence that the Syphretts' objective in entering into the reverse mortgage was the purchase or lease of a good or service. See id. (explaining that "'[a]n activity related to a loan transaction is a 'service' for DTPA purposes only if the activity at issue is, from the plaintiff's point of view, an objective of the transaction, not merely incidental to it[]'") (quoting White v. Mellon Mortg. Co., 995 S.W.2d 795, 801 (Tex. App—Tyler 1999, no pet.)). The Syphretts' claims pertain to the reverse mortgage and not the original purchase of the property, and there is no evidence that the Defendants played any role in the transaction by which the Syphretts originally purchased the property. We conclude that the Syphretts' alleged DTPA claim relates to a reverse mortgage rather than goods or services acquired in the original transaction, and there is no evidence the Syphretts are consumers as defined under the DTPA. See id. at 23-24 (citing Rojas, 571 F. App'x at 279; Miller, 726 F.3d at 725; Hansberger, 2009 Tex. App. LEXIS 5792, at **5-6; White, 995 S.W.2d at 801; Brown v. Bank of Galveston, Nat'l Ass'n, 930 S.W.2d 140, 144 (Tex. App.—Houston [14th Dist.] 1996) aff'd, 963 S.W.2d 511 (Tex. 1998)). Accordingly, we overrule Appellants' fourth issue.
Common Law Fraud and Negligent Misrepresentation Claims
To state a claim for common law fraud, a plaintiff must show
(1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury.Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex. 2011) (citing Aquaplex, Inc. v. Rancho la Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam)).
To state a claim for negligent misrepresentation, a plaintiff must show:
(1) defendant's representation to a plaintiff in the course of defendant's business or in a transaction in which the defendant had an interest; (2) defendant's providing false information for the guidance of others; (3) defendant's failure to exercise reasonable care or competence in obtaining or communicating information; (4) plaintiff's justifiable reliance on defendant's representation; and (5) defendant's negligent misrepresentation proximately causing the plaintiff's injury.Willis v. Marshall, 401 S.W.3d 689, 698 (Tex. App.—El Paso 2013, no pet.) (citing Miller v. LandAmerica Lawyers Title of El Paso, 362 S.W.3d 842, 845 (Tex. App.—El Paso 2012, no pet.)). Thus, recovery for both common law fraud and negligent misrepresentation requires proof that the defendant's false representation caused the plaintiff's injury. See Formosa Plastics Corp., USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998) (common law fraud); Fed. Land Bank Ass'n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991) (negligent misrepresentation). Even assuming Generation or Nationstar made a false representation to the Syphretts about insurance, there is no summary judgment evidence that the Syphretts' claimed injury—lack of insurance coverage or payout for casualty losses to their home—was caused by any false representations by Generation or Nationstar.
According to the Syphretts' amended petition, their home sustained storm damage on September 12, 2014, and on April 19, 2015. In his deposition, Bobby testified that the Syphretts called American Modern and gave them an "insurance number" and the insurer told them that they could submit a claim under "that policy." In his affidavit, Bobby asserted that "[f]or some[] reason we could never get the insurance company to respond to the claims by paying for the losses."
The summary judgment evidence includes copies of two letters from American Modern to Bobby Syphrett. One letter is dated June 5, 2017, and the other is dated June 12, 2017, and both letters reflect a date of loss of September 12, 2014. The June 5th letter from American Modern's adjuster states that the adjuster had made multiple attempts to schedule an inspection of the property and had requested that Bobby contact the adjuster directly. The June 12th letter from American Modern to Bobby states as follows:
On 6-5-2017 I asked for some information about your claim. As of today, I have not received the requested information.A November 17, 2015 letter from Nationstar to Bobby stated in relevant part:
If I do not hear from you or receive the requested information within ten days, I will consider your claim inactive.
. . . We have received a total of $16,508.43 + $5,657.80 = $22,166.23. We have deposited the funds into an account and are monitoring the repairs to the home.Bobby acknowledged in his deposition that he had received this letter, and the following exchange occurred in the deposition:
We will need a contract for repairs and/or receipts for supplies. . . .
When the repairs are completed we need to order a final inspection. . . .
[Counsel for Defendants]. Now, it's asking you to -- to obtain a release of the funds, it's asking you to send in a contract for repairs or receipts for supplies.
Did you ever do that?
[Bobby]. No.
[Counsel for Defendants]. And why not?
[Bobby]. Because if we accept those moneys, then we're -- we're locked in. That's our damages.
William Heeb, a corporate representative for American Modern, testified in his deposition that the Syphretts' property was covered for loss by wind and rain on September 12, 2014, and for hail damage on April 19, 2015. According to Heeb, claim number 153924AA was opened on August 20, 2015 for the April 16, 2015 loss, and it was closed on November 20, 2015, and the claim was resolved by American Modern paying $22,776.23. Heeb testified that another claim was submitted to American Modern on May 11, 2017, but it was closed on June 21, 2017, "due to nonresponse from the borrower to request for information and request for inspection."
The summary judgment evidence also includes a "Summary" document relating to claim 153924AA and policy AM30105024 that reflects a loss date of April 16, 2015, to the property at 11 Snow Pond Place, Bobby Syphrett as the borrower and Generation as the insured, and reflecting that $22,776.23 had been paid. The summary judgment evidence includes a "Summary" document relating to claim 342153AA and policy AM30092414 that reflects a loss date of September 12, 2014, to the property at 11 Snow Pond Place, with Bobby Syphrett as the borrower and Generation as the lienholder, and that $610.00 was paid. This document also reflects "Resolution . . . No Response[.]"
Under the sham affidavit rule, if a party submits an affidavit that conflicts with the affiant's prior sworn testimony and does not provide a sufficient explanation for the conflict, a trial court may disregard the affidavit when deciding whether the party has raised a genuine fact issue to avoid summary judgment. See Lujan v. Navistar, Inc., 555 S.W.3d 79, 82 (Tex. 2018). The summary judgment evidence reflects that American Modern had received the Syphretts' claims, had told the Syphretts they could submit claims under a policy that covered the property, and had processed the Syphretts' claims, but the insurance company had been unable to make any payments because the Syphretts had failed to return calls, failed to submit contracts or receipts, and failed to make arrangements for an adjuster's inspection. By his own admission, Bobby did not submit the requested documentation to the insurance company, and he did not send the insurer a contract for repairs or receipts for supplies because he believed he would then be "locked in[]" on damages. Bobby's affidavit conflicts with his prior sworn deposition testimony, and the trial court would not have erred in regarding the affidavit as a sham and insufficient to raise a genuine fact issue. See id.
That said, even accepting all the allegations in Bobby's and Janice's affidavits as true, the affidavits failed to create a genuine issue of material fact as to causation or wrongful or false representations by Nationstar or Generation. See Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009) (explaining that a court must grant a no-evidence motion for summary judgment unless the respondent produces summary judgment evidence raising a genuine issue of material fact on the alleged claims). Accordingly, the trial court would not have erred in concluding there was no evidence that any failure of insurance coverage on a policy covering the Syphrett property was caused by a false representation by Generation or Nationstar. We conclude that the trial court did not err in granting summary judgment for Generation and Nationstar on their no-evidence motions for summary judgment on the Syphretts' claims for common law fraud and negligent misrepresentation. See Parker, 514 S.W.3d at 220; Ridgway, 135 S.W.3d at 600.
For the reasons outlined above, we dismiss Appellants' fifth and sixth issues, and we overrule all other issues. We affirm the orders of the trial court granting summary judgment for the Appellees.
AFFIRMED IN PART; DISMISSED IN PART.
/s/_________
LEANNE JOHNSON
Justice Submitted on May 13, 2020
Opinion Delivered November 12, 2020 Before McKeithen, C.J., Kreger and Johnson